Ghana records $14.39 billion loss in trade mis-invoicing
Ghana, is said to have lost a cumulative amount of $14.39 billion over a ten year (2002 to 2011) period through trade mis-invoicing in the extractive Industry.
This is per a report by the African Centre for Energy Policy (ACEP) on illicit financial flows (IFFs) from the extractive sector.
The report further indicates that, if the time period is taken from 1960 to 2012, then IFFs through trade mis-invoicing amounts to $40 billion.
Trade mis-invoicing in the extractive sector, the report further states, occurs in the export of gold to other countries.
“About $6 billion worth of gold exports from Ghana to India, Dubai and Switzerland between 2013 and 2016 has not been reported and accounted for,” the report revealed.
Trade mis-invoicing is the deliberate over-invoicing or under-invoicing of exports for the purpose of avoiding paying tax to the country.
Touching on the phenomenon in a presentation, Tax Consultant and Senior Lecturer at the University of Ghana Law School, Dr Ali-Nakyea noted that, West Africa accounted for 38% of all IFFs from the African Continent.
North Africa, Central Africa, Eastern Africa and Southern Africa contributed to 28%, 10%, 11% and 13% respectively to IFFs from the continent.
According to him, the developing world has lost in excess of $6.6 trillion in IFFs outflows between 2003 and 2012 alone with Sub-Saharan Africa losing some $528.9 billion.
“Mineral and fuel producing African countries are losing and estimated $50 billion per annum through IFFs, other estimates show that approximately $854 billion has been moved out of Africa over a 39 year period, making Africa a net creditor to the rest of the world,” he noted.
Speaking further during his presentation, Dr Ali-Nakyea noted that some challenges in dealing with IFFs include poor resource governance models, weak tax administrations coupled with multinational tax avoidance schemes and tax havens beyond the influence of the government.
On the way forward in dealing with IFFs, he noted that government should strengthen the capacity of its financial institutions, particularly revenue authorities and the ministries responsible for negotiating mining and petroleum contacts to monitor transfer pricing, thin capitalisation among others.
Also, government should expeditiously develop a road map and action points for implementation of the key recommendations of the High Level Panel on IFFs from Africa.
