THE OCCASION OF THE MEETING OF SHAREHOLDER ON THE PAYMENT OF TAX AT THE PORTS
LADIES AND GENTLEMEN,
1. WELCOME
I welcome you all to this meeting. I am happy that you have been able to honour this invitation at such a short notice.
2. DISCUSSION
The meeting is intended to discuss some of the problems that we face in our operations at the Ports and together find ways of resolving some of those problems.
3. MAIN REASON
The main reason however, is to educate ourselves on payment of taxes at the Ports especially the 1% income tax paid on the CIF value goods imported.
4. IRS LAW
Indeed the Internal Revenue Act, 2000 (Act 592) requires that every importer should produce a Tax Clearance Certificate at the Port before being allowed to clear his or her goods in commercial quantities from the Ports. Section 118 (2) of the Act states that “The Commissioner of Customs, Excise and Preventive Service shall not permit any importer or other person to clear goods in commercial quantities or meant for commercial purposes form a port or a factory in Ghana unless the importer or other person produces to the Commissioner a tax clearance certificate issued in respect of the importer or that other person in the year of assessment in which the goods are to be cleared”.
5. IMPLICATIONS
This implies that every importer who imports goods in commercial quantities is expected to obtain tax clearance certificate before being allowed to clear his or her goods.
6. REALISATION
But the IRS later realized that there are some people who import goods in commercial quantities but are not actually doing business. For example many Ghanaians abroad when visiting home bring goods for sale. There are other Ghanaians too who may be called one-time importers. For the sake of such people, and to facilitate the clearing of their goods, the Commissioner of IRS decided to station personnel at some of the Ports and gave administrative instructions to collect 1% of the CIF value of the goods as income tax.
7. INSTRUCTIONS
The instruction was therefore meant to affect only such first time importers. But I am told that the system is being grossly abused. Even established companies and individuals who have files no longer go the IRS District Offices to get tax clearance certificates but rather go straight to the Ports to pay the 1% tax o the CIF value of goods and get their goods cleared.
8. REGULAR IMPORTERS
I have also been informed that some companies and individuals that choose to go to the Ports directly to pay the 1% tax are those who normally have huge tax arrears to pay and also other taxes like withholding taxes, PAYE, National Reconstruction Levy etc. to pay at the District Offices Even sometimes, they actually go to the District Offices and when they are told to pay indebtedness, they rather go to the ports to pay the 1% tax.
9. CLEARING AGENT
I am also informed that some clearing agents, even when they know that the importers have files, and even when the importers themselves want to obtain the tax clearance certificates, convince them to pay at the Ports because going to the Offices would delay the processing of their documents.
10. LOSS OF REVENUE
The practice causes the state to lose huge revenue. I would also not like a situation where we may be compelled to introduce measures to block the loophole as such measures may eventually make things difficult for those who clear goods.
11. INTERACTION
This “friendly” meeting is therefore to give us all the opportunity to interact and discuss the issue and educate ourselves so that the government will not lose revenue.
12. FIRST TIME IMPORTERS
You now know that the 1% tax paid on CIF value is only meant for first time importers who do not have income tax files and even after clearing the goods, if the importer wants to do business, then he/she is expected to open a file and obtain tax clearance certificate before clearing any subsequent goods.
13. COMPULSION
I believe that after this meeting, some clearing agents would not compel their clients who have files to pay tax at the harbour. You will desist from that practice.
14. EXTRA TAX
I have also been informed that you complain that even when the importers have gone for the tax clearance certificates, they are almost always asked by the IRS personnel at the ports to pay some extra tax at the ports. I will leave that to IRS personnel to explain. But my plea to you is that we should all work to preserve and maximize government revenue and as good citizens, let us not do anything that will affect government revenue negatively as the country thrives on the taxes collected.
15. CONCLUSION
Thank you very much for your attention.