Business News of Wednesday, 23 November 2016
Finance Minister, Seth Terkper
Government owes mining companies over 280 million Ghana cedis in Value Added Tax as at the end of last year, a report by the Ghana Chamber of Mines has revealed.
Though the Value Added Tax Act of 2013 stipulates where the deductable tax of an individual or business exceeds the expected amount; the excess should be refunded within thirty days, the report indicates otherwise.
According to the Ghana Chamber of Mines Annual report 2015, refunds of credits are allowed only after an audit has been completed, posing a barrier to the payment of the statutory fund.
It takes about nine months before VAT credit is audited and accepted by the Ghana Revenue Authority; which in turn takes months or sometimes years for the audited claim to be paid by the GRA.
The delay is taking a toll on the cash flow of mining companies amidst high inflation and currency depreciation.
Chairman of the Mine Workers Union, Prince William Ankrah, says the situation impedes effective operations of mining companies.
“Lack of cash flow means you are going to take some decisions to survive which could be detrimental. Even though our nation needs money, this is not for the nation so we must get it back,” he said.
The mining sector was the leading foreign exchange earner in 2015 contributing in excess of 31 percent of total merchandise exports but the situation weighing them down could affect their inputs next year.
The non-refundable VAT effectively becomes another debt, compounding challenges from depreciation on the amounts due.
Even though government has attempted to address this challenge by allocating additional funds into the Refund Account, it still persists.
In the experience of member companies, according to the chamber, direct income tax audits currently occur every two to three years whilst indirect tax audits currently occur at least once a year.
Ghana Chamber of Mines Chief Executive, Sulemana Konney describes the situation as a nightmare on the operations of the member companies.
“Because you have obligations, you have to pay your suppliers, cooperate taxes etc. So that is a major constraint to the mining industry,” he said.