| It is a situation that most Ghanaians find rather baffling. The question we must pose is: Is the GRA not aware of the Base Erosion and Profit Shifting (BEPS) initiative by the Organisation for Economic Co-operation and Development (OECD) and the Group of Twenty Nations (G20), designed to provide nations such as Ghana, with the tools needed to stop such egregious tax evasion by multinational companies? |
It is time the authorities in Ghana understood clearly that they need to stop piling on tax upon tax on ordinary people and small businesses - and make sure instead that multinational companies in Ghana stop evading taxes on the profits they generate in their operations here.
Those who lead our country must also understand that there is far too much unnecessary and unacceptable expenditure in the public sector, which amount to profligate spending.
Instead of piling on yet more taxes, the attitude of our leaders ought always to be to first search for ways that savings can be made in government spending, and how non-tax revenues, such as dividends from state-owned enterprises (SOE), can be boosted - by making them more efficient and profitable through better management at all levels.
Would the world come to an end, for example, if government ministers are unable to travel abroad to attend international conferences - because Ghana needs to cut down on government spending? Certainly, not.
What was the point in spending some of Ghana's oil money to respray buses and plaster the photographs of President Mahama and a number of former presidents on them - when those selfsame buses could have earned decent revenues from advertisers even if they had been left in the original colours they were sprayed by the manufacturers?
Why have all those in government who sanctioned and played a part in that foolishness still not been dismissed - after the departure of the sacrificial lamb, Dzifa Ativor, the former minister for transport: who resigned shortly after the so-called "rebranding" scandal broke?
Above all, at a time of austerity, why do we have to continue having a small army of government ministers and deputy ministers, if Ghana is broke? Ditto presidential aides and presidential advisers? When will our leaders come to realise that that does not simply make sense in an era of enforced-austerity?
Their numbers ought to be trimmed drastically to save money - so that the tax burden being shouldered by ordinary people and small businesses can be lessened.
It is totally unacceptable that Ghana has so many government ministers, whiles many EU nations with far bigger economies, have to make do with much smaller numbers of ministers - in order to stay within their public-sector spending limits.
How can we continue to justify shoving taxpayers' money down what that financial equivalent of a blackhole - of endless perks and sundry allowances - represents, I ask?
In a nation of diverse-ethnicity, whose different traditional cultures discourage curiosity in the young, and whose educational system produces learners-by-rote who seldom think creatively, it is little wonder that it never strikes the vast majority of our "booklong' ruling elites that the most effective way to widen the tax net and boost revenues, is to make Ghana the nation with the world's lowest tax rates - setting rates so low that only the conscienceless and the most recalcitrant individuals and businesses (who ought to face long mandatory jail sentences when caught and tried) will try to evade them.
That is what will actually help make our country prosperous in the long run - and that is not rocket science either. The GRA needs to undergo a cultural change - one that makes it a partner that enhances private-sector growth: not a hindrance to private initiative and a killer of enterprise. Hmm, Ghana - eyeasem o: enti yeawieye paa enei?
For the benefit of readers of this blog, I have culled a summary of the OECD/G20 BEPS initiative, from the OECD's official website, for their perusal. Please read on:
"About Base Erosion and Profit Shifting (BEPS)
Follow
us @OECDtax
In an increasingly interconnected
world, national tax laws have not always kept pace with global corporations,
fluid movement of capital, and the rise of the digital economy, leaving gaps
and mismatches that can be exploited to generate double non-taxation. This
undermines the fairness and integrity of tax systems.
Base Erosion and Profit Shifting
(BEPS) refers to tax planning strategies
that exploit these gaps and mismatches in tax rules to artificially
shift profits to low or no-tax locations where there is little or no economic
activity, resulting in little or no overall corporate tax being paid. BEPS is
of major significance for developing countries due to their heavy reliance on
corporate income tax, particularly from multinational enterprises (MNEs).
Research undertaken since 2013 confirms the potential magnitude of the BEPS problem. Estimates conservatively indicate annual losses of anywhere from 4 - 10% of global corporate income tax (CIT) revenues, i.e. USD 100 to 240 billion annually.
BEPS is a global problem which
requires global solutions. For the first time ever in tax matters, OECD and G20
countries worked together on an equal footing. More than a dozen
developing countries have participated directly in the work and more than 80
non-OECD, non-G20 jurisdictions have provided input.
Fifteen actions equip governments with the domestic and
international instruments needed to tackle BEPS. The final BEPS package gives
countries the tools they need to ensure that profits are taxed where economic
activities generating the profits are performed and where value is created,
while at the same time give business greater certainty by reducing disputes
over the application of international tax rules, and standardising compliance
requirements.
- For more detailed information, read our Frequently Asked Questions (FAQs).
The BEPS Action Plan
endorsed by the G20 in July 2013 identified 15 key areas to be
addressed.
The final BEPS package,
which includes and consolidates the 2014 interim
reports has been developed and agreed in just two years. This
package was presented by OECD Secretary-General Angel Gurría to G20 Finance
Ministers at their 8 October meeting in Lima (read press release)
and will subsequently be presented to G20 Leaders at their summit in Antalya on
15 -16 November 2015.
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Actions 8-10: Aligning Transfer
Pricing Outcomes with Value Creation
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Action 11: Measuring and Monitoring
BEPS
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Action 12: Mandatory Disclosure
Rules
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With the adoption of the BEPS
package, OECD and G20 countries, as well as developing countries that
participated in its development, will lay the foundations of a modern
international tax framework under which profits are taxed where economic
activity and value creation occur. Work will be carried out to support all
interested countries in implementing the rules and applying them in
a consistent and coherent manner, particularly those for which capacity
building is an important issue.
Monitoring implementation and the impact of the different BEPS measures is another
key element of the work ahead. Following the G20 and OECD call for even increased inclusiveness, a new framework
for monitoring BEPS will be conceived and put in place in 2016, with all
interested countries and jurisdictions on an equal footing.
The technical work on BEPS is undertaken by the OECD Committee on Fiscal Affairs (CFA) , with all Associates on an equal footing, through its subsidiary bodies:
- Working Party 1 (Tax Conventions and Related Questions), in relation to part of Action 2 (Neutralise the Effects of Hybrid Mismatch Arrangements), Action 6 (Prevent Treaty Abuse), Action 7 (Prevent the Artificial Avoidance of PE Status), and Action 14 (Make Dispute Resolution Mechanisms More Effective);
- Working Party 2 (Tax Policy Analysis and Tax Statistics), in relation to Action 11 (Establish Methodologies to Collect and Analyse Data on BEPS);
- Working Party 6 (Taxation of Multinational Enterprises), in relation to part of Action 4 (Limit Base Erosion via Interest Deductions and Other Financial Payments), Actions 8 (Assure that Transfer Pricing Outcomes are in Line With Value Creation / Intangibles), 9 (Assure that Transfer Pricing Outcomes are in Line With Value Creation / Risks and Capital), 10 (Assure that Transfer Pricing Outcomes are in Line With Value Creation / Other High-Risk Transactions), and 13 (Re-examine Transfer Pricing Documentation);
- Working Party 11 (Aggressive Tax Planning), established by the CFA to carry out the work in relation to part of Action 2 (Neutralise the Effects of Hybrid Mismatch Arrangements), Action 3 (Strengthen CFC rules), part of Action 4 (Limit Base Erosion via Interest Deductions and Other Financial Payments), and Action 12 (Require Taxpayers to Disclose their Aggressive Tax Planning Arrangements).
- Forum on Harmful Tax Practices (FHTP), in relation to Action 5 (Counter Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance); and
- Task Force on Digital Economy (TFDE), established by the CFA to carry out the work in relation Action 1 (Address the Tax Challenges of the Digital Economy).
Taxation plays a central role in
promoting sustainable development, and developing countries face
significant challenges in developing their tax capacities and mobilising
domestic resources. Engagement of developing countries in the international
tax agenda and on BEPS is important, in particular to ensure they receive
appropriate support to address the specific challenges they face.
Engagement with developing countries has been extensive since the beginning of the BEPS Project. Over 80 developing countries and other non-OECD/non-G20 economies have been participating and discussing the challenges of BEPS through direct participation in the CFA, regional meetings in partnership with regional tax organisations, and thematic global fora.
- For more information, visit our BEPS & developing countries page"
End of culled summary from the website of the OECD.
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