Govt reverses reduction in benchmark import values

Government has directed the exclusion of some imports from its reduction in benchmark values, by a range of 30 percent to 50 percent, which has been implemented with effect from April 4, 2019.

This was announced in a circular from the Ghana Revenue Authority, dated May 4, 2020. However, Goldstreet Business is still unable to confirm which goods are affected by this partial policy reversal.

Following the circular, there are expectations among some importers that this may be the precursor to a complete policy reversal, that would restore the benchmark valuations on all goods to their levels prior to last year’s cuts, which were 30 percent for vehicles and 50 percent for all other types of imports.

The benchmark import valuation is the value placed on an import by GRA in assessing the import duty payable. The duty payable is the applicable percentage of the benchmark import value. However this method of computing duty payable is only applied when GRA rejects the importers self- assessment valuation, as being too low.

The reduction was implemented by government in an effort to win market share with regards to imports for Ghana’s two seaports, at Tema and Takordi respectively, from competing sea ports along the West African coast line.

Announcing the reduction in benchmark import values at the beginning of April 2019, Vice President Mahamudu Bawumia noted that the values applied by Ghana are much higher than those applied at competing ports, in some cases 100 percent to 200 percent higher.

He noted that this was partly why Ghana’s import traffic through its seaports had only grown by four percent between 2013 and 2018, whereas imports through Togo’s Lome port had grown by 300 percent over that period.

A reversal of the benchmark value reduction has been on the cards since the latter part of last year for two primary reasons. One is that local manufacturers, under the ambit of the Association of Ghana Industries has protested that the benchmark value reduction, in consequently lowering the import duties payable, has made imports more price-competitive against locally manufactured goods.

The other is that the reduction has simply not generated the desired results. Instructively, import volumes during the second quarter of 2019, immediately following the values slash, were 16.9 percent lower than the volumes achieved during the corresponding period of 2018.

Importantly, the reduction in benchmark import values and consequent lower import duties payable on various imports, has taken a heavy toll on government’s revenues. Total port revenues for 2019 were GHc12 billion, down significantly from the GHc13.2 billion generated in 2018.

Respected policy think tank IMANI Africa reckons that a complete reversal of the benchmark value reduction could add on some GHc300 million every month to government’s revenues which are being hard hit by the effects of the coronavirus pandemic on economic activity.