Wednesday, March 21, 2007

Outsource tax audit jobs- GNCCI

11/03/07
GNCCI (fin)
Story: Boahene Asamoah
THE GHANA National Chamber of Commerce and Industry, (GNCCI), the umbrella body of trade and industry in the country has proposed to the authorities to out-source tax audit jobs carried out by the Internal Revenue Commission (IRS) to ensure effective tax monitoring and collection.
A report by the chamber on advocacy for tax reduction and widening of the tax net, which was funded by the Business Sector Advocacy Challenge Fund (BUSAC) said the out-sourcing of tax audits would deal with the inadequate capacity of the IRS.
The report said the audit capacity of the IRS was highly inadequate for any effective monitoring to be done to enhance collection of revenue.
The report observed that while there were some collaboration between existing audit firms and tax practitioners there was the need to enhance that programme by taking measures towards its implementation.
The chamber proposed that existing firms and tax practitioners awarded tax audit jobs be mandated to declare their interests or any conflict of interest by statutory declaration.
The report suggested that ex-staff of the IRS who were already in tax practice or accounting jobs could be recruited, given intensive training in tax auditing and be encouraged to apply for audit jobs.
The report which touched on wide-ranging reforms in the tax administration to enhance efficient tax delivery and widening of the tax net in the country also called for the harmonisation of the various audit units of the IRS, the National tax Audit Bureau and other Audit units of the revenue agencies including the Large tax unit.
It said the activities of revenue agencies were not properly co-ordinated in the area of tax audits which had reduced the efficiency of tax authorities through duplication of efforts and had increased the cost of doing business by tax payers.
The chamber proposed that the activities of all the revenue agencies be merged into one unit to be responsible for all aspects of audits under the various tax laws in the country.
Again, the chamber called for the integration of the IRS with other regulatory bodies such as the Registrar General’s Department and the Serious Fraud Office through the use of Information technology to help prevent fraud, revenue leakage and tocapture new companies in a bid to widen the tax net.
“The IT capabilities of the IRS should be enhanced and integrated with those of other regulatory bodies to facilitate the capturing of many more tax payers into the tax net and to prevent and combat fraud”, the chamber said.
On taxation of overtime work, the chamber observed that the legislative instrument 1811 which amended the taxation of overtime allowances makes taxation of the overtime allowances too generous.
That, the chamber said could encourage the shifting of income from normal employment income to overtime income, thus leading to revenue leakage.
The chamber proposed that the law on overtime allowance be amended to reduce applicable rates. It proposed that overtime allowance of ¢1,200,000 per month should attract tax element of 2.5 per cent. Overtime in excess of ¢1,200,000 per month but less than ¢4 million per month should also attract tax of 10 per cent.
Again, the report said overtime in excess of ¢4 million per month should be taxed at the person’s marginal rate. In effect, the concessionary rates on overtime allowance should be applicable to overtime paid of not more than 50 per cent of monthly income.
On measures to reduce cost of capital, the report expressed concern about capital lock up that businesses suffer in their bid to comply with provision of the tax law.
That, the workshop noted was as a result of tax overpayment and the slow and inefficient refund system.
“Thus businesses have to resort to borrowing and other sources of funding their activities”. This increases the cost of capital of businesses”, the report stated.

Outsource tax audit jobs- GNCCI

11/03/07
GNCCI (fin)
Story: Boahene Asamoah
THE GHANA National Chamber of Commerce and Industry, (GNCCI), the umbrella body of trade and industry in the country has proposed to the authorities to out-source tax audit jobs carried out by the Internal Revenue Commission (IRS) to ensure effective tax monitoring and collection.
A report by the chamber on advocacy for tax reduction and widening of the tax net, which was funded by the Business Sector Advocacy Challenge Fund (BUSAC) said the out-sourcing of tax audits would deal with the inadequate capacity of the IRS.
The report said the audit capacity of the IRS was highly inadequate for any effective monitoring to be done to enhance collection of revenue.
The report observed that while there were some collaboration between existing audit firms and tax practitioners there was the need to enhance that programme by taking measures towards its implementation.
The chamber proposed that existing firms and tax practitioners awarded tax audit jobs be mandated to declare their interests or any conflict of interest by statutory declaration.
The report suggested that ex-staff of the IRS who were already in tax practice or accounting jobs could be recruited, given intensive training in tax auditing and be encouraged to apply for audit jobs.
The report which touched on wide-ranging reforms in the tax administration to enhance efficient tax delivery and widening of the tax net in the country also called for the harmonisation of the various audit units of the IRS, the National tax Audit Bureau and other Audit units of the revenue agencies including the Large tax unit.
It said the activities of revenue agencies were not properly co-ordinated in the area of tax audits which had reduced the efficiency of tax authorities through duplication of efforts and had increased the cost of doing business by tax payers.
The chamber proposed that the activities of all the revenue agencies be merged into one unit to be responsible for all aspects of audits under the various tax laws in the country.
Again, the chamber called for the integration of the IRS with other regulatory bodies such as the Registrar General’s Department and the Serious Fraud Office through the use of Information technology to help prevent fraud, revenue leakage and tocapture new companies in a bid to widen the tax net.
“The IT capabilities of the IRS should be enhanced and integrated with those of other regulatory bodies to facilitate the capturing of many more tax payers into the tax net and to prevent and combat fraud”, the chamber said.
On taxation of overtime work, the chamber observed that the legislative instrument 1811 which amended the taxation of overtime allowances makes taxation of the overtime allowances too generous.
That, the chamber said could encourage the shifting of income from normal employment income to overtime income, thus leading to revenue leakage.
The chamber proposed that the law on overtime allowance be amended to reduce applicable rates. It proposed that overtime allowance of ¢1,200,000 per month should attract tax element of 2.5 per cent. Overtime in excess of ¢1,200,000 per month but less than ¢4 million per month should also attract tax of 10 per cent.
Again, the report said overtime in excess of ¢4 million per month should be taxed at the person’s marginal rate. In effect, the concessionary rates on overtime allowance should be applicable to overtime paid of not more than 50 per cent of monthly income.
On measures to reduce cost of capital, the report expressed concern about capital lock up that businesses suffer in their bid to comply with provision of the tax law.
That, the workshop noted was as a result of tax overpayment and the slow and inefficient refund system.
“Thus businesses have to resort to borrowing and other sources of funding their activities”. This increases the cost of capital of businesses”, the report stated.

Legal action to stop container charges

Story: Boahene Asamoah

A Section of stakeholders in the shipping industry has resolved to take legal action as its last resort to compel ship owners and their agents to abolish what they described as illegal fees and charges at the country’s ports.
The stakeholders, including the Ghana Chamber of Mines, the Ghana National Chamber of Commerce and Industry (GNCCI), and the Ghana Shippers Council, took the decision at a workshop on abolishing illegal container fees at the country's ports organised by the Ghana Institute of Freight Forwarders (GIFF) as part of an advocacy programme funded by the Business Sector Advocacy Challenge (BUSAC) Fund, which is supported by the Danish International Development Agency (DANIDA), the UK Department for International Development (DFID), and the United States Agency for International Development (USAID).
Representatives of the various institutions were unanimous on the need to also educate their members on the effects of the illegal container fees charged by the ship owners and their agents.
The Ghana Institute of Freight Forwarders recently called on the government to regulate the activities of ship owners and their agents in the country to prevent them from charging illegal container fees, and to extend the free demurrage period from seven days to 14 days.
GIFF noted that the Ship Owners and Agents Association of Ghana (SOAAG) now charged between $100 and $150 as container fee.
It noted that although the Ministry of Roads Transport issued a directive in 2002 that the container administrative fee was suspended, ship owners had instead increased the fee.
The GIFF identified nine individual charges, which the ship owners had classified as container fee though it had no legal backing.
Speaking at the workshop, the Tema District Chairman of GIFF, Mr Willie Addae stated that over the past three years, a total of $188 million has been siphoned out of the country as a results of the illegal activities of the ship owners and their agents.
This he said were charges on only container fees, which was an average of $175 per container.
He said in 2003 a total of 305,000 containers were imported to the country amounting to $53.5 million, while in 2004, 354,700 containers were shipped into the country and fetched the ship owners a total of $62 million.
In 2005, a total of 416,400 containers were shipped into the country amounting to $72.8 million as a result of illegal charges of ship owners and their agents.
Mr Addae stated that what was worrying was that these charges were for services being rendered by the Ghana Ports and Harbours Authority and also the fact that the amount of money was rather going to individual foreign companies and not to the state.
The Freight and Legal Manager of the Ghana Shippers Council, Mr Emmanuel Arku, said the council was committed to the course of ensuring that the illegal charges of ship owners and agents were abolished.
He said the council had over the past years continued to advance the course of all its stakeholders in a bid to ensure that the shipping sector became more robust.
Mr Arku said a second option of putting pressure on the Ghana Maritime Authority (GMA) to come out with the Legislative Instrument (LI) that would regulate the shipping industry in the country was also available to them.
For his part, a representative of the GNCCI, Mr Emmanuel Doni Kwami, said there was the need to sensitise members of its association on the illegal charges.
He also suggested that members of GIFF must also make efforts at meeting the select committee of Ports and Harbours Authority of the Parliament to sensitise them as part of the advocacy programme.
The Vice President of the Greater Accra Chamber of Commerce and Industry, Mr Stephen Owusu, who is also an importer, said the many charges being levied on importers were killing many businesses in the country and suggested an educational programme by GIFF to sensitise members of the chamber on the illegal fees.
Inadequate infrastructure and equipment at Tema port in 1987 led to charges such as loading and unloading rates, high ship turn-around time, high freight and demurrage charges, delays in berthing of ships and very low ship productivity rates.
Mr Owusu stated that the shipping agents were granted $10 to offset the cost involved but noted that the equipment situation had been rectified and therefore the levies were no more necessary.

Ecobank Transnational to raise $300m- To Finance Pan-African expansion

Story: Boahene Asamoah, back from Bamako, Mali
read by ho
ECOBANK Transnational Incorporated (ETI) is to raise an amount of $300 million from the capital market to finance its Pan-African expansion programme.
The ETI is listed on three bourses in the sub-region, namely the Ghana Stock Exchange (GSE), the Nigerian Stock Market and the Abidjan-based BRVM.
The West and Central African bank with a strong financial muscle has set its eyes on firmly establishing its presence in Central, East and Southern African countries through acquisition and collaboration in a bid to become a truly Pan-African bank.
Speaking at a press conference at the end of a two-day board meeting in Bamako, Mali, the Board Chairman of the group, Mr Mande Sidibe, said the bank was on course to become a Pan-African bank without losing its African identity.
The bank is represented in 15 West and Central African countries and hopes to open up two more subsidiaries in Soa Tome and Principe this year, as well as other branches in Kenya, Tanzania and Uganda in the coming months.
“Our objective is to make the bank the first Pan-African group on the continent of Africa,” adding that “our meeting here in Bamako attests to this strategy,” the board chairman said.
Mr Sidibe, a former Prime Minister of Mali, said the bank also had a mission to help deepen the financial sector of the economies of African countries through its knowledge acquired over the years in operations in West Africa.
He said the bank was conscious of its identity and assured the press that the bank would still remain an African bank which was driven mainly by African experts.
Shareholders of the group approved the decision to raise ¢300 million from the capital market at an Extraordinary General Meeting held in Lome, Togo in January.
In addition to the increase in capital the general meeting also approved a split of the company’s shares and amendment of its articles of association to better protect its shareholders in view of the triple listing of the group on the three stock exchanges in the sub-region.
The Group Chief Executive Officer, Mr Arnold Ekpe, said “the bank sees itself as an institution that has a part to play in the development of African economies” and added that the African continent is making significant gains”.
He said the planned sourcing of funds from the capital markets was also to give an opportunity to the bank’s shareholders to further invest in the group, while giving the shareholders good returns.
Mr Ekpe added that the funds would also be used to finance the retail end of the bank’s strategy to make banking more convenient and accessible to the unbank publics.
“Ecobank is investing significantly in the retail banking sector,” he said, stressing that it was the bank’s way of facilitating business growth and development.
Mr Ekpe said the group had also developed many products that addressed the needs of businesses and stated that the group would therefore continue to review its structures and strategies to be ahead of competition.