High Taxes killing Importers and Businesses

A significant number of importers and businesses are deserting their business operations over the increasing number of taxes charged at the country’s ports coupled with delays and bureaucracy.

This development has been going on for months and in some cases a number of years.

They are demanding an overhaul of the revenue collection systems at the various ports in the country.

They argue that they are over burdened with taxes which impede the efficient revenue collection and general activities at the ports.

The business operators have also threatened to boycott business related activities at the ports altogether if more practical methods are not applied in running the revenue collection system at the port.

Executive Member of the Ghana Union Traders Association (GUTA), Benjamin Yeboah also said taxes must be reduced to ease the burden they are currently facing as well as achieve tax compliance.

“Taking the 3% VAT Flat rate into consideration, what brought about the whole thing was just compliance; if you want people to comply you have to create the system such that they will comply. If you are charging fifty percent plus on CI value, you don’t get compliance and that is where the problem lies. Let’s look at the taxes, let’s look at levies and charges and how we can reduce them it will help compliance,” he stressed.

The high magnitude of imports has significant impact on the country’s exchange rate performance annually, especially during the first and fourth quarter, during which the cedi experiences massive depreciation against the dollar and other major currencies.

This is due to the high demand yet low supply of dollars by importers and traders.

Moves by Government over years to reduce importation has been unsuccessful.

Information gathered shows that, there is a growing number of importers who have ditched the business due to the challenges they face at the ports.

Recent figures from the central bank of Ghana reveal that the country’s imports have declined with exports increasing.

Total balance of trade recorded a surplus of 1.429 billion dollars as at June, 2017, equivalent to 3.1 percent of GDP. The surplus is an improvement over the 1.4 billion dollars deficit recorded in the same period last year.

The development has been attributed to the declining imports for the period under review. The figures which summarize Ghana’s economic activities between June 2016 and the same period 2017, stated that Ghana’s total exports increased by US$2 billion to US$7.159 billion as at June 2017.

This was an increase from the US$5.139 billion recorded in the same period last year. Ghana’s oil exports tripled within the one year period. The country exported US$1.24 billion worth of oil as at June 2017; up from the US$408.3 million worth of oil exports.

Gold and cocoa exports also followed with US$1 billion and US$224 million worth of exports as at June this year, respectively.

Meanwhile imports recorded a general drop between the twelve months period ending last month.

Ghana’ imports reduced by 12.42%; from US$6.54 billion to US$5.72 billion during the one year period.

Oil imports dropped by 19 percent; from the US$905.8 million to US$733.1 million.

Also, non-oil imports declined by 11.35%; from US$5.63 billion to US$4.99 billion as at June 2017.

Some importers have cited high taxes, delays, bureaucracy and duplication of roles as the main reasons why majority of importers are abandoning the trade.

There are a number of taxes charged at the ports currently one of them is the Common External Tariff which was enacted in 2016, it repealed the Harmonized System and Customs Tariff Schedule 2012, there is also import duties which range between 0 and 35 percent depending on the nature of item imported.

Others are VAT and NHIL of 17.5 percent and special import levy among others.

The National Executive member of the Ghana Union of Traders Association (GUTA), Benjamin Yeboah who confirmed the development to Citi Business News said he was also forced to abandon the business because of the challenges.

‘I started this business some time back. I stopped because doing business at the ports to me is like a punishment because the trauma, the high taxes, bureaucracy, delays, problems you face there is very hectic.

You are forced to do so many things just to get your goods cleared at the ports. In your quest to ensure your goods come out of the ports, one is even forced to push someone to do what he or she is actually mandated to do and that is the problem you see at the ports.

I have even stopped importing because I got fed up with the system. Now I buy from the importers after they are done clearing their goods’.

Earlier the Vice President, Dr. Mahamudu Bawumia instructed that all agencies at the ports streamline their activities for a paperless transaction in September 2017.

In his view, the move should reduce the level of human interaction and cut down corruption.

In addition, businesses should be able to save time and money as their turnaround time at the ports will be reduced substantially.

The Ghana Community Network Services Limited (GCNet) has said, it will from August, 2017 pilot its systems aimed at achieving a paperless transaction at the ports.

The General Manager, of GCNET Alwin Hoegerle, explains that the exercise should help adjust the system for a smooth take off in September 2017.

“Probably very early in August we will be starting to check everything and I will expect that we will be able to meet the Vice President’s deadline as far as paperless processing is concerned,”he told Citi Business News at this year’s National trade Facilitation Awards over the weekend.

Meanwhile, a Technical Committee Member for the Ghana Institute of Freight Forwarders, Kweku Otchere Darko said a smoother operation of post clearance audits at the ports would enhance their operations.

“In the new article there is a session that says that we should even reduce physical examination on consignment. But then as a result of these interdictions, even if you have ten or fifteen containers you are forced to position every container down so all of them will be stripped and you don’t even have the space that is why I am saying that clearance is an extension of custom procedures.”

Mr. Otchere Darko added that the process of checking goods that arrive in the country should be simplified in order to reduce the risk of damage to the goods “The fact that a clearance officer has checked a document doesn’t mean the job is done, it goes through examination so at the end of the day it is up to the post clearance audit to check what has been done and if any infraction is found it have bee committed then you are sent a demand notice.”

Source: Adnan Adams Mohammed

 

 

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