The Chartered Institute of Taxation, Ghana (CITG), in collaboration with ICAG, ACCA, CIMA, IoD-GH, and CIB (Ghana), has organised a Tax Clinic dubbed “Understanding the Dynamics of Custom Duties and Related Taxes Towards Improved Compliance and Tax Audit Risk Exposure.”
The Tax Clinic also constitutes the second in a series of joint CPDs organised by Ghana’s sole tax regulatory body.
The 3-hour virtual programme sought to analyse custom-related issues, the series of changes and updates within customs, including the exemptions law, and propose strategies to improve tax compliance, mitigate exposure risk, and boost domestic revenue.
Held on Wednesday, January 24, 2024, the joint session brought together tax industry leaders and experts, including George Ohene Kwatia (President of CITG), Sena Dake (President of ICAG), Maxwell Ntiri (Senior Manager, PWC), Dr. Frank Yao Gbadago, immediate past Registrar at CITG and a Senior Lecturer and Ag. Head of Accounting Department at Akenten Appiah-Menka University of Skills Training and Entrepreneurial Development (AAMUSTED), Ken Amoah, a Senior Manager at EY Ghana, Dr. Isaac Crentsil, a Retired Commissioner (Customs) and a member of the Governing Council (representing the Chairman, Emmanuel Obeng Asiedu), Alhaji Seidu Yakubu (Retired Deputy Commissioner of the Ghana Revenue Authority) and Joachim Owusu Afriyie (Manager, Tax and Regulatory Services, Deloitte West Africa).
It was moderated by Dr. Frank Gbadago and Mr. Ken Amoah.
In his opening remarks, the President of CITG, George Ohene Kwatia, stated that the forum emphasises the importance of adapting to evolving regulatory frameworks and industry complexities while facilitating the exchange of ideas between professionals.
“The theme resonates with the critical significance of keeping pace with the ever-evolving regulatory frameworks and dynamic nature of the industry in an era characterised by constant changes and escalating complexities.”
“This event emerges as an opportunity for professionals to not only augment their knowledge but offer a meaningful exchange of their ideas, which together can improve tax compliance and risk management to new heights.”
On behalf of the Chairman of the CITG Council, Dr. Gbadago explained the importance of customs duties and related taxes towards improved tax compliance and audit exposure in the intricate landscape of taxation.
He revealed that customs duties and related taxes emerge as pivotal components, housing substantial audit exposure rates for businesses across Ghana.
“The event serves as a remedy to equip participants with the insights needed to handle the complexities of customs duties and related taxes, which is not merely an educational event but rather a proactive step towards enhancing compliance and mitigating tax risk exposure, particularly post-clearance audit and investigation,” he said.
Speaking on the theme of “Understanding the Dynamics of Custom Duties and Related Taxes, Maxwell Ntiri of PwC said that to understand the dynamics of custom and minimise risk exposure, it is important for taxpayers to document every action undertaken. This, he noted, comprises archiving invoices and other documentation to ensure smooth declarations.
He also highlighted the importance of goods classification and the selection of the right tariff heading.
“ECOWAS Common External Tariff, such as goods classification, enables you to pick the right tariff heading and to get the classifications correct, thus the right tariffs and rates that apply to items you are importing into the country.”
Furthering on, Mr. Ntiri explained customs evaluation as looking at the value and the customs duties applied to Cost Insurance and Freight (CIF), which is used to determine the duties to be paid on imported goods: “In a scenario where someone imported a Honda CRV in 2013 that has been certified by customs and you also import the same item and you are unable to show proof of the value relating to your item, then customs will refer you to the identical good that is more or less the same as from the manufacturer with the same feature with the value that was produced.”
Mr. Ntiri recommended that importers implement “customs risk management” to classify goods, pay appropriate duties, tariffs, and levies, and conduct accurate evaluations to minimise risk exposure.
He also reiterated that importers need to keep intact their invoices, bills of lading, declarations, waybills, parking lists, manifests, and certificates of origin for imported materials.
“A tax-compliant corporate citizen is an indispensable partner in the GRA revenue mobilisation campaign,” he said.
Chief Revenue Officer at the Import and Export Unit of GRA, Edward Bagyiri, spoke about the recent changes in customs and related issues.
He said that some duties customs officers claim are: import duties, import VAT, exercise duties, licence fees, rent charges, administrative fees, and penalties, as provided for in the Customs Act. He stated that the taxes charged on these goods are to encourage local production and discourage the consumption of certain products.
From in-person transactions to online transactions, he indicated that individuals can pay for their duties on importations and other taxes through the use of the Customs online services for prompt payment and related activities.
“Before you can clear your goods from the port, you need to have a bill of lading, an attested invoice covering the consignment, and a packing list that contains all the items in the container. The customs authorities expect importers to download an import declaration form from the Ministry of Trade System.”
Mr. Bagyiri said that importers need to have a tax identification number (TIN) and Ghana card, as well as a permit from the relevant agency, such as the Food and Drugs Authority or Ghana Standards Authority, depending on the kind of products to be imported.
According to him, once the required documents are intact, the agent is required to submit a declaration on the Customs Authority online platform to review the submitted documents and get approval for payment to be done—to finalise the processes by the agent.
He advised importers to ensure they provide all necessary documentation for approval and delivery of their goods to curb delays.
A Manager at the Tax and Regulatory Services of Deloitte West Africa, Joachim Owusu Afriyie, said the purpose of a customs post-clearance audit is to ensure the value, origin, and classification of goods are declared correctly and the amount of revenue legally due has been identified and retrieved, which is a “confirmation of goods customs has released for declaration.”
He disclosed that post-audit clearance is triggered when there is improper record-keeping and a lack of shipping entries in the country, which can be related to issues with freight and insurance.
He therefore urged organisations to continually renew their import licences before the end of the year, adopt good record-keeping practices, and ensure all imported goods comply with the regulatory laws applicable to them.”.
In his brief remark, Dr. Isaac Crentsil commented that the customs regime is the foundation of tax compliance. According to him, the Tax Clinic is an eye-opener, and taxpayers should not take the customs regime for granted so tax compliance can be improved at the domestic level.
ICAG President Sena Dake said customs duties have been a primary source of income generation for the government as well as protection for local economies.
She added that “for ICA Ghana, our joy is that this clinic touches on the priorities of our institute (ICAG), which include advancing effective public financial management and ensuring that accountability through the application of approved standards is in compliance with laws and regulations.”
Madam Dake encouraged professionals in audit, tax, accounting, and other professions to support businesses by giving quality and excellent professional service that will add value to their operations.
In addressing the question of whether custom duties are applicable to services and the indirect taxes that are applicable on imported taxes, Mr. Maxwell Ntiri submitted that custom duties do not apply to imported goods; however, he noted that in determining the evaluation of the goods that are being imported from the handling of the products from the port, VAT will be added to determine the custom value of the service in question.
Delving further, he explained that services can fall into the realm of VAT in the sense that “if the services in question are not used in making the taxable supplies of the person in question, there will be an imported VAT on the service.”
Alhaji Seidu, in response to the IRS tax deposit and when it becomes applicable, plus what can be done to avoid payment of the deposit,” recommended that taxpayers and importers keep their tax records and belong to a tax office.
“Belonging to a tax office will aid importers in attaining a tax clearance certificate that will be used to retrieve your goods, so when you file your return at the Finance Office of Customs, it can be safe,” he said.
He bemoaned the practice where most taxpayers do not file their returns, which makes them susceptible to government interference. He encouraged importers to join a tax office, which will help them receive tax clearance certificates to support their goods clearance.
On mitigation of risk exposure by importers, Mr. Owusu Afriyie of Deloitte said that importers must, during the post-clearance customs audit, keep import records and receipts. In addition, he advised that importers link their import records with their stock records to prevent inconsistencies with stock records and import documentation during an audit from Customs and conduct periodic reviews of documentation to ensure its accuracy and validity to avoid fines and penalties.
Commenting on what qualifies an importer for tax exemption and items that will have a concessionary rate from imported duty, Mr. Ntiri acknowledged that there are laws on products that are exempted from import duties.
“Section 2 of the Constitution contains persons,organisations, and institutions that are exempted from import duties, which include the Office of the President, international organisations, and other institutions enshrined in the Constitution.”
Concluding the Tax Clinic, Dr. Gbadago thanked the participants for availing themselves of the joint session and expressed the hope that the education will aid all in becoming tax-compliant so that they do not spend their limited resources on settling liabilities and other penalties.
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