Seek professional advice on tax laws prospective investors in oil and gas sector urged
Ernst & Young (EY), Ghana has advised investors in the oil and gas industry to seek relevant professional advice on the tax laws in the oil and gas industry before acquiring a stake in or entering into a joint venture with entities in the industry.
This, according to EY, would ensure the payment of the appropriate taxes by investors and also “avoid being caught at the wrong side of the tax laws.”
Lead advisors in the EY Oil and Gas Tax Team Isaac Nketiah Sarpong and Kwasi Owiredu –gave the advice when they led discussions on ‘Tax Issues in Oil and Gas Acquisitions and Joint Ventures’ at the just ended 2019 Local Content Conference & Exhibition organised by the Petroleum Commission, in Takoradi.
It was on the theme: ‘Maximising in country value addition: the role of indigenous Ghanaian companies (IGCs) in joint ventures (JVCs) in the upstream petroleum sector.’
The EY team highlighted taxes as critical issues that investors should consider before making their investment decisions, stressing that “that if potential investors considered all relevant advice, they would accept willingly to honour their tax obligations.”
Touching on some regulatory requirements, they explained that entry into the oil and gas industry was restrictive, and, thus, only entities that met the minimum requirements were allowed entry.
They again said, for a foreign participant providing oilfield services to enter, “it shall have to enter into a Joint Venture (JV) with an IGC, invest not less than USD200,000 and allow the IGC at least 10 per cent equity interest in the JV.”
The EY team later in an interview noted that only few people honour their tax obligations in Ghana, resulting in a situation where “the very few are made to shoulder a huge tax burden.”
“Government should bring on board professional advisors to assist it find a lasting solution to this canker. Investors might not require tax incentives if they found the tax burden competitive relative to other jurisdictions. Until everyone honours their tax obligations, the government will continue to tax the honest few, and may be seen as over-taxation by some taxpayers.” the EY team suggested.
As platinum sponsor of the event, EY praised the PC for organising the conference and expressed their readiness to continue to sponsor the event.
Pic Isaac Nketiah Sarpong, Oil and Gas Tax Advisory Lead at EY Ghana office.
FROM CLEMENT ADZEI BOYE, TAKORADI
