Ghana enjoys a long standing relationship with Denmark, a country which has contributed enormously in various ways towards the development of Ghana immediately after the attainment of Ghana’s independence in 1957.
The recent three-day visit to Ghana by the Danish queen, Queen Margrethe II, accompanied by a large business delegation from Denmark indicates the importance Denmark attaches to its relationship with Ghana, which now is focused on commercial cooperation.
To strengthen the relationship between both countries, the Danish Minister for Development Cooperation, Ulla Tørnæs and Minister for Taxation, Karsten Lauritzen, visited Ghana last week to familiarize themselves with the government’s drive and initiatives to increase domestically generated funds. They were also keen on identifying avenues of potential future partnership with the relevant stakeholders and agencies to support the tax system.
During their two-day working visit, the two Danish ministers had meetings with the Minister for Finance, Ken Ofori-Atta and Minister for Lands and Natural Resources, John Peter Amewu, to learn about the Ghanaian system for collecting royalties from the mining sector.
The Danes met with civil society organisations to deliberate on the Extractive Industries Transparency Initiative (EITI) which is receiving Danish support. They also visited the Golden Jubilee Terminal at the Tema Harbour where they met with management of the Ghana Revenue Authority for a briefing on the Danish-supported programme to strengthen its customs division.
By the kind courtesy of the Danish Ambassador to Ghana, Tove Degnbol and the Communications Assistant at the Danish Embassy, Andreas Johansen, I had the opportunity to have an interaction with the two ministers and also be part of a business get-together at which both ministers made presentations on the importance of improving tax systems internationally, the general Danish efforts to help improve the tax systems in Ghana and beyond as well as future collaborations.
On his impression about the Ghanaian tax system, Karsten Lauritzen lauded Ghana’s national drive at making the port community’s activities paperless and indicated that it was the way to go. He further expressed his optimism about the Ghanaian tax system becoming more efficient to increase revenue generation and highlighted that as an area Denmark could provide support.
“Our debt collection system at a point collapsed when we decided to build an IT system for automatic debt collection. When people are paid, a little bit of it is taken to pay for their debt which was done manually. The IT system that was built failed and didn’t work, creating huge issues which led to the dismissal of everyone involved in creating this IT system.
The only way to resolve this was to simplify the complex legislation on the tax structure, how much people – a student, businessman and others will have to pay. Also, we had to deploy both automatic and manual phases for the system, thereby having 80percent of the task automated and the remaining 20percent done by human beings,” he added.
On the areas for possible partnership, Mrs. Tørnæs said: “at the moment, we are supporting customs, which as I understand it a huge revenue source for Ghana. We are also helping in the training of custom employeesand also supporting in the buildingof a new training school for customs.
For the future, nothing has been decided but one of the areas I have identified for Denmark’s collaboration is when it comes to transfer pricing. We have a lot of experience in that area and we can help the revenue authorities in Ghana on technical level and also building capacity of personnel.”
On ways of improving the existing Ghanaian system, Mr. Lauritzen said that “one area Ghana could collect taxes and make more revenue will be the mining sector. It is strange to know that the contribution of the mining sector to generated revenue from the collection of taxes is very small. And of course it comes down to old negotiated agreements which need to be looked at. The minerals taken out of the country is tasked at a very low level”.
Denmark is one of the countries in the world with the highest tax level. Tax revenue in Denmark is almost 45percent of GDP. In international comparisons, Denmark has a very efficient tax administration, especially with regard to the collection of personal income tax and corporate income tax.