The Assistant Commissioner in charge of Policy and Programs with Domestic Tax Revenue Division of the Ghana Revenue Authority (GRA), Edward Gyemerah, yesterday told the Judgment Debt Commission that his outfit would follow due process to compel African Automobile (AA) to honour its GH¢6.1million tax liability to the state.
According to him, he read in the news that Managing Director (MD) of African Automobile Limited (AAL), Mohammed Hijazi, said he would not pay the tax when he appeared before the commission the previous day. He told the Commission that if it was the case, then GRA would follow the due process which includes going to court to compel AAL to pay the liability.
When asked by the Sole Commissioner, Justice Yaw Appau, to explain how taxing was done and whether the AAL's judgment debt amount was amendable to tax, Mr. Gyemerah said any transactional revenue that any person received needs to be disclosed to the Commissioner of GRA, whether it was taxable or not.
He, however, regretted that this particular judgment debt was not disclosed to GRA. The Commissioner of GRA only became aware of the matter when he appeared before the Public Accounts Committee (PAC) and it came to light that the money was not disclosed after viewing the company's returns. Based on this disclosure, he said GRA followed it up by not touching the principal, but the GH¢8.1 million interest which was an income earned and, therefore, taxable.
He said, GRA calculated the interest at 25% and post penalty rate of 200% for non-disclosure to the Tax Commissioner. So in all they sent a report of GH¢6.1 to AAL as tax liability, but it had not been paid. When asked by the Lead Counsel, Dometi Kofi Sorkpor, whether the penalty was always 200% or at times it was 300%, he explained that the law gives the GRA Commissioner a discretionally powers either to impose 200% or 300% on tax but with this particular case, the former was used.
AAL was supposed to pay GH¢6.1million to GRA as tax on GH¢8.2 million that it collected from the state interest on the judgment debt for servicing and supplying Mitsubishi spare parts to 18 ministries, departments and agencies (MDAs) between 1994-95 and 2010. Mr. Hizazi said when he appeared before the commission, the interest he procured was not profit to warrant the payment of tax and that, even if anything at all, "I have rather lost for rendering services to the MDAs for the past 15 years and not receiving any payment."
The African Automobile Limited, a Mitsubishi Company in Ghana entered into an agreement with the MDAs to maintain and supply spare parts for their vehicles. At a point in time, the total debt owed AAL was GH¢145,652.34 which was paid, but the company resorted to legal action to claim interest on the arrears that were not paid from 1995 to 2010, thus bringing the interest to GH¢8,232,561.49 which was higher than the principal sum (GH¢145,652.34). The Attorney General Department (AG), however, did not defend the case when it was filed at the Commercial Court in Accra.