Tax authorities say Vodafone remits GH¢2.1b to parent company outside Ghana

… hasn’t paid corporate income tax for six years

The Ghana Revenue Authority (GRA) says between 2012 and 2016, Vodafone Ghana has remitted GH¢2.1 billion to its parent company outside this jurisdiction. The amount, the tax authorities say is about 30 per cent of the telecoms provider’s turnover, adding that the company has not paid corporate income tax for six years. A fact that Vodafone officials have admitted arguing that it is because the company hasn’t made any profit since it took over Ghana Telecoms in 2009.

This is contained in an affidavit filed by the GRA in response to a motion filed by Vodafone Ghana at the High Court of Justice, Commercial Division in Accra, against the GRA disputing tax assessments of GH¢160 million. The GRA has asked Vodafone to pay 30 per cent of the stated assessment while negotiations continue, which is what the law says, but Vodafone says it won’t pay and has requested a waiver from the Commissioner-General.

The telecoms provider is asking the court to compel the Commissioner-General to determine its request for a waiver of the said payment of the 30 per cent of the amount which is to the tune of GH¢49 million. The case was scheduled for Wednesday, October 11, 2017, but wasn’t called because Mr. Kwame Owusu, head of the Transfer Pricing Unit of the GRA – just a day before the court’s scheduled sitting on Wednesday filed the affidavit challenging Vodafone’s claims– the court has adjourned hearing to Wednesday October 18, 2017.

The writ filed at the Commercial Court in Accra, and lists Vodafone Ghana as Ghana Telecommunications Co. Ltd, states that “the lawyers of the Applicant shall move this Honourable Court praying for an order of certiorari, bringing up and quashing the decision of the Respondent demanding payment of 30 per cent of a disputed tax assessment and for an order of mandamus compelling the Respondent to determine the Applicant’s request for a waiver of said payment.”

The GRA in the affidavit obtained by ghanabusinessnews.com describes Vodafone’s motion as ill-conceived and misplaced.

Meanwhile, Vodafone officials have denied the claims that the company has been remitting its parent company outside Ghana.

The 29 point affidavit among others states that Vodafone Ghana applied to the GRA under section 42(6) of the Revenue Administration Act 2016, (Act 915) to waive the payment of the 30 per cent, but also states that section 42(7) of the Revenue Administration Act 2016, (Act 915) sets out the issues to be considered by the GRA in determining an application for a waiver.

The affidavit states further that in the light of section 42(7), the GRA wrote to Vodafone that it was yet to consider whether to exercise the power under section 42(6) of Act 915, noting that under section 43(2) of Act 915, the Authority has 60 days upon receipt of an objection to a tax decision to make a determination of the objection, but 26 days after filing its objection and 19 days after the request for a waiver of the 30 per cent, Vodafone Ghana filed for application to quash a decision that had not been made and to compel the making of a decision for which the statutory period had not expired.

In the affidavit, the GRA describes Vodafone’s application to invoke the supervisory jurisdiction of the court as premature, owing to the fact that it was filed on September 13, 2017, 26 days from the date of receipt of Vodafone’s objection to the tax assessment raised on it.

The GRA contends further that the transfer pricing audit of Vodafone Ghana is still ongoing which necessitated the Respondent’s request for information dated on August 21, 2017, adding,” that the request for further information with respect to the Transfer Pricing Audit ‘in order to facilitate the audit process’ is different from the Audit and tax assessment of GH¢162, 468, 361.90 under the Technology Transfer Regulations, 1992 (L.I. 1547).”

The GRA argues further that the application to court by Vodafone Ghana, is clearly an attempt to avoid satisfying the conditions imposed by law for a determination of its objection against a tax decision, adding, “that the demand for the payment of 30 per cent of the assessment is a mere fraction of tax assessed considering the amount of money remitted to Vodafone Ghana’s parent company.”

The GRA tells the court in the affidavit that Vodafone’s current application is not only without any legal and factual basis, but same is completely erroneous, wholly misconceived and thus unmeritorious and prays that same be dismissed with costs.

By Emmanuel K. Dogbevi
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