Kwabena Apau Awua Anto, Head of the Ghana Revenue Authority’s (GRA) Excise Unit, has revealed that the GRA will soon rigorously enforce the Excise Duty law that requires manufacturers of excisable goods to issue a bond or security.
“All manufacturers producing excisable goods are required to register under the Excise Duty law. This is the first point of compliance. The warehouse where you are keeping those excisable goods must also be registered and you should also provide bond or security. The first two are rigorously being followed. It is the third part, which is the issuance of a bond or security that has been relaxed but discussions are ongoing to begin rigorously enforcing that too.”
Speaking during the UK-Ghana Chamber of Commerce’s (UKGCC) and PwC Ghana webinar on Compliance for Businesses in Ghana under the Excise Duty Act 2024 (Act 878) & Excise Duty (Amendment) Act 2023 (Act 1093 and Act 1108), Mr. Anto explained that the law would now be rigorously enforced because bonds provide critical information on “the quantity of excisable goods to be produced, the amount of excise duty to be collected, and the date by which excise duty will be paid.”
A bond must therefore be issued to provide grounds for the Commissioner General of the GRA to retrieve taxes, should the manufacturer fail to pay according to the law. Manufacturers who fail to enter into bond or lodge security will pay twice the amount of duty in penalties. Mr. Anto added that if manufacturers intend to increase their production, they ought to ensure their bonds reflect the change so the appropriate revenues can be collected.
What is Excise?
Excise is an indirect tax administered world-wide for different reasons. It is not a general consumption tax like Value Added Tax (VAT). Excise is imposed on selected products either locally manufactured or imported. They are also imposed at different stages of the manufacturing process, either at the point of sale, distribution, point of importation, or point of manufacture.
Why does Ghana’s government impose Excise Duties?
According to Mr. Anto, excise duties are imposed to discourage certain behaviours and reduce their consumption to curtail non-communicable diseases such as hypertension, diabetes, and others.
“In the last amendment 1093, excise duty on sweetened beverages and fruit juices was introduced. It was aimed at making the product a bit expensive so consumption of these products can be reduced, their consumption of which cause health problems. It is also used for the redistribution of wealth. You can impose excise duty on products patronised largely by the affluent to benefit society.”
Excisable products
Excisable goods, per Section 1 of the Excise Duty Act 2014, include alcoholic drinks (spirits) with excise duty rate of 50percent of its ex-factory price; and wines with an excise duty rate of 45percent of its ex-factory price.
Mr. Anto remarked that the current amendment of the Excise Duty Act “introduced a hybrid excise duty rate on tobacco products. For every stick of cigarette, the excise duty rate of 28pesewas is applied, together with ad valorem rate of 50percent of the ex-factory rate or if imported, the value applicable to it at the ports.
The excise duty rate for beers and malt drinks are affected by a sliding scale policy where manufacturers, depending on the quantity of local raw material used for the manufacture of beers and malt drinks, are granted concessionary duty rates. Fruit juices, on the other hand, attract a standard excise duty rate of 20percent whether locally manufactured or imported. Other excisable products are pharmaceuticals and textiles (domestic/African prints) which are zero-rated, plastic and plastic products, and petroleum products.
Compliance with the Excise Duty Act
Mr. Anto remarked that ‘registration’ is the beginning of the compliance process. Therefore, manufacturers of excisable goods who fail to register with the GRA pay the higher of twice the amount of duty or GH¢500-1000, while manufacturing outside a warehouse attracts twice the amount of duty.
Other offences such as failure to submit a return attracts a fine of GH¢500 in addition to GH¢10 per day, while failure to pay tax on the due date attracts 15percent of duty in addition to interest of 5percent for each day of default. “Excises are not that popular. However, we have introduced measures to make sure that there is compliance, and to protect people’s brands so all of us should take interest in making sure we comply”, Mr. Anto stated.
Excise Tax: challenges and solutions
Maxwell Ntiri, Senior Manager – Tax Line of Service at PwC Ghana and webinar moderator, noted that Ghana’s excise tax regime is fraught with challenges. These, he said, include insufficient tax education, varying in positions of tax officials, and weak enforcement of excise tax laws.
He suggested an intensification of tax education, consistency in applying the provisions of the tax laws, and increased compliance enforcement, respectively, as solutions. Mr. Anto also admitted that the registration process is quite a cumbersome one. He shared, however, that officers are on hand to guide clients through the process should they visit the GRA offices.
The future of tax in Ghana
For his part, Daniel Nuer, Head of the Tax Policy Unit, Ministry of Finance, remarked that Ghanaians should expect more excise tax regimes as the government reduces taxes and provides incentives for other sectors of the economy. “The general idea is to be able to use taxation to expand the economy and support growth.”
He urged industry to share their concerns with the tax authorities so they can be considered when tax policies are being drafted. He also encouraged Ghanaians to see the implementation of taxes as a collective duty and not just as that of the revenue authority’s or the government’s. “Imitation tax stamps and smuggling works against our jobs and our livelihoods so when you notice things like this, give us a call and we will follow up”, he said.
Mr. Anto added that “if you find any product on the market without tax stamps, please notify the GRA office close to you.”
He invited Ghanaians to download the GRA Tax Stamp Authenticator app from the Google Play store, to verify the authenticity of stamps affixed to products to help enhance compliance. The panel also discussed a wide range of related topics such as credits and the conditions for refunds, the rationale behind the introduction of zero-rated excisable goods, the emissions levy, and the difference between VAT and Excise Duty exemptions.
