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Business News of Saturday, 24 June 2017

Source: citibusinessnews.com

Strict tax laws to avert revenue loss over illicit financial flow

Tax Analyst, Abdallah Ali Nakyea is pushing for a critical review of Ghana’s tax regime to reduce the massive economic losses due to illicit financial flows.

He argues that though the canker is depriving the country of huge revenue, a stricter implementation of the existing laws should prevent any further losses.

The Global Financial Integrity (GFI) report on impact of illegal financial flows in some African countries showed that Ghana lost over 14 billion dollars between 2004 and 2014 due to the canker.

This also represented 6.6 percent of Gross Domestic Product (GDP).

Speaking at a public lecture on the impact of illicit financial flows on Ghana’s public sector, Mr. Nakyea couldn’t fathom how Ghana could be used as grounds for the illegality with the prevailing laws.

“For the period between 2003 and 2012, we have 528.9 billion dollars overseas development assistance received 348.2 billion dollars; FDI 248 billion dollars. What we have lost is almost twice the two put together. Did we need the overseas development assistance? Did we need foreigners to come and develop in our country? If we block these flows then we are self sustaining,” he remarked.

The lecture which was organized by the Ghana Integrity Initiative, formed part of activities to mark this year’s Public Services Day.

Mr. Nakyea further indicated that the revenue loss which is 6.6 percent of Gross Domestic Product, is also more than double the expected allocation for the country’s capital expenditure for this year (3.5%).

According to the tax analyst, a number of factors have been cited as contributing to the huge revenue losses.

These include commercial transactions involving multinational companies, transfer pricing, among others.

In his view, Ghana’s ability to curtail these instances should also prevent the over-reliance on external aid and grant.

“We have money laundering where people disguise the outflow of the money through commercial transactions. They can enter into agreements; I have borrowed from this company and I am to pay so much as interest but no funds actually came but then based on that agreement I have to actually pay due so we need to look at the commercial financial transactions,” he added.