New transfer pricing regulations will address illicit financial flows – GRA

Mr Ammishaddai Owusu-Amoah, the Commissioner-General, Ghana Revenue Authority (GRA) says the new regulation on transfer pricing will address illicit financial flows through trade mispricing in the country.

The new Transfer Pricing Regulation Legislative Instrument 2412 was enacted in 2020 to replace the 2012 regulations to eliminate ambiguities with transfer pricing compliance on cost contribution arrangements.

This was in a speech read by Mr Dominic Naab, Technical Advisor to the Commissioner-General, GRA, in Accra at the opening of a workshop on measuring Illicit Financial Flows (IFF) in the country.

The workshop was organised by the Ghana Statistical Service to estimate IFF in Ghana’s export and import trade for the period 2000 to 2021 in accordance with the United Nations Conference on Trade and Development and the United Nations Economic Commission for Africa.

A report from Global Financial Integrity in 2015 revealed that Ghana lost $3.2 billion through trade mispricing for both imports and exports.

The report says in 2015, Ghana’s trade with advanced economies amounted to $9 billion.

The Commissioner-General said there had been instances where records on exports from the country fell far below the international records on some commodities.

The most recent, he stated, was the huge disparities in the exports of gold between official records and exports of other commodities.

He said IFF continued to be the bane of the country over the years and called for concerted efforts and stringent measures to protect the country’s revenue.

“The menace of illicit financial flows is so worrying that there has been a universal call for action to measure the impact and to significantly reduce it worldwide by 2030,” he said.

The GRA, he stated, decided to subscribe to Royalty Range in 2019 to help with benchmarking analysis to counteract the effect of transfer pricing manipulation.

Mr Owusu-Amoah said branch profit tax remained unresolved as the upstream players were resolute in not paying the tax, stressing that some companies engaged in cost padding to reduce their taxable profit through complex structures.

The Ghana Revenue Authority would continue to help in protecting revenue through the fight against illicit financial flows and looking forward to reading the recommendation of the workshop to fight the canker.

Dr Faustina Ainguah, the Deputy Government Statistician, said the workshop would enhance participants’ knowledge of a wide range of illicit financial flows.

That, she explained was critical because the United Nations report on illicit financial flows showed that, huge sums of funds were lost through IFF in developing countries.

Mr Allan Mukungu, Head of Economic Governance and Public Finance Section, Macroeconomics and Governance Division, United Nations Economic Commission for Africa, urged African leaders to maximise revenue mobilisation to improve the needed infrastructure growth.

Source: GNA