Industry warns of job losses over tax stamp

Dr. Yaw Adu Gyamfi, President of the AGI

Over 1,500 people could lose their jobs if the Ghana Revenue Authority (GRA) does not allow some manufacturing firms to resume production while they take steps to comply with the Tax Stamp Policy, the Association of Ghana Industries (AGI) has warned.

This follows what the association describes as disruption to production lines of some manufacturing firms by the GRA, which has since October 2, 2018 embarked on full implementation of the tax stamp policy – leading to the closure of about 15 manufacturers, including Kasapreko and Bel-Aqua.

“Without recourse to the tax stamp implementation arrangements and process updates that the beverage manufacturers had given the GRA and Ministry of Finance, the GRA task force on Tuesday October 2, 2018 stormed the premises of some AGI beverage manufacturers unannounced: restricting the movement of products from factories to sales outlets,” said Dr. Yaw Adu-Gyamfi.

“This action by the task force, coupled with misleading reports on tax stamp compliance, do not put our law-abiding companies in any good light,” he noted, warning that it could have a telling effect on production and jobs if the companies are not allowed to resume normal production, or given time to adjust.

Dr. Adu-Gyamfi, who was speaking at a press conference in Accra in reaction to the policy’s full implementation, said although the association is in total support of the policy, it does not subscribe to the manner in which it is being implemented.

The AGI, he said, rather asked for time till December before the GRA demands full compliance with the policy, because of difficulties in acquiring tax stamp applicator equipment.

“The companies have taken all necessary steps that lead to full compliance, including ordering tax stamp machines. The purchase orders have been shared with government to demonstrate our commitment. Some companies are already conducting test-runs of their new applicators on production lines.

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“So, we are therefore appealing to government not to shut its doors for further dialogue, but rather provide dispensation for companies to continue doing business based on the evidence submitted showing how they will be fully compliant by the end of this year,” he advanced.

Background

Tax stamps are small stickers with security features supplied by government to some manufacturers and importers, to be affixed to their products before they are released onto the market. The aim is to check tax evasion.

In line with the Excise Tax Act, 2013, the policy was launched in August 2017 by Finance Minister Ken Ofori Atta as part of government’s effort to address counterfeiting of products on the market and to improve revenue generation.

One of its key objectives is to enable the GRA effectively monitor the payment of Excise Tax to ensure the correct quantum of tax is paid.

Goods on which the excise tax stamp must be affixed include: cigarettes and other tobacco products; alcoholic beverages including spirits whether bottled, canned or contained in kegs; non-alcoholic carbonated beverages, whether bottled, canned or packaged in any other form; and bottled water, as well as others determined by the Finance Minister.

Implementation

Between 1st January 2018 and 30th June 2018, government bore the full cost of purchase for the tax stamps of both local manufacturers and importers.

Beginning 1st July 2018 to 31st December 2018, government shared the stamps’ cost with manufacturers and importers on a 50-50 basis till the end of 2018 – when government might review the arrangement.

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After this year, producers and importer will be required to fully pay for their tax stamps.

So, as it stands, government is still absorbing 50 percent of the stamps’ cost while the rest is met by the manufacturers and importers.

However, the AGI argues that the new system slows down production by some 10 percent, because the companies have yet to update to automated methods of affixing the stamps on products.

According to the GRA, a registered manufacturer or importer can also apply to GRA through the Excise Tax Portal www.ghanataxstamp.com for the supply of an approved category and quantity of tax stamps.

For imported goods, an importer may put in a request through the Excise Tax Stamp Portal to GRA to purchase the stamps and forward them to a foreign manufacturer of the goods to be imported.  The foreign manufacturer shall be registered with the GRA.

The GRA also provides tax stamps at ports of entry to taxable persons who import excisable goods occasionally for affixing on their imports.

On Tuesday October 2, 2018, the GRA dispatched a taskforce to among other things ensure all companies or products that fall within the excisable goods range are compliant with the law.

This final phase of the implementation process will involve seizure, confiscation and prosecution of non-compliant members of the public who do not affix the tax stamp to their excisable products.

Emmanuel Kofi Nti, Commissioner of GRA, speaking to the press last week stated that government had given enough grace period to manufacturing firms, importers and retailers to deal with challenges associated with the policy for more than six months, hence the need for full implementation.

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