Ghana is estimated to lose $1.4 billion annually through Illicit Financial Flows (IFFs), Tax Justice Network Africa (TJNA), an international fair tax advocacy non-governmental organisation (NGO), has cautioned.
Ishmael Zulu, policy officer, in charge of Tax and Equity of the NGO, noted that the unlawful transfer of funds was depriving the country of the necessary financial resources.
The funds, he said, were transferred to the developed economies and tax havens such as Mauritius, Cayman Islands and British Virgin Islands.
Mr Zulu, who issued the warning during a two-day training workshop for journalists in Accra, under the theme: “Empowering Voices for Equitable Taxation: Building a Generation of Tax Justice Champions,” said the African continent lost $88.6 billion through IFFS.
The Policy Officer, in charge of Tax and Equity, who spoke on the topic: “State of Play of IFFs in Africa – A Tax Perspective,” said according to the United Nations Commission on Trade and Development, IFFs were “Illicit in origin, transfer or use; that reflected and exchange of value instead of purely financial transactions and that cross-country borders.”
Mr Zulu said IFFs were executed through commercial activities, which constituted 65 per cent of IFFs, criminal activities, which constituted 30 per cent and corruption accounting for five per cent.
He said commercial activities which constituted the bulk of IFFs: “Arise from business-related activities deliberately planned with a goal to, among others, hide wealth, evade or aggressively avoid tax, and dodging customs duties and domestic levies,” through trade mispricing , base erosion and profit shifting, tax exemptions and mis-invoicing of services intangibles.
Mr Zulu entreated journalists in Ghana and Africa to step up their investigative reporting, to help uncover IFFs, to raise revenue for the development of Ghana and Africa.
A Tax Policy Officer of TJNA, Evelyn Muedo, noted that multinational and corporate organisations employed price transfer methods to avoid paying tax in developing countries.
She said that multinational and corporate organisations took advantage of the relationship between them and their partners and associates in Africa, to inflate or reduce prices of goods produced for their associates or partners to avoid tax payment.
The Head of Secretariat of NETRIGHT, Mrs Patricia Blankson Akpakpo, said the key objective of SCUT II was to strengthen the capacity of journalists, to publish stories on tax justice, domestic revenue mobilisation and IFFS and also empower journalists with the knowledge and expertise required to effectively uncover hidden financial practices, and expose tax evasion.
She said the programme was to empower journalists to write tax and domestic revenue mobilisation stories from a gender perspective and create space for the voices of women to be heard in such stories.
Mrs Akakpo said the programme was to increase public awareness and engagement on tax justice, equity and accountability.
She said it was also to strengthen partnerships and collaboration between journalists, civil society organisations working in the field of financial transparency and governance.
The two-day workshop, organised by the Network for Women’s Rights in Ghana (NETRIGHT) in collaboration with TJNA, was in connection with a three-year project, titled Scaling UP Tax Justice III (SCUT III) in Ghana, Kenya, Uganda, Tanzania, Mozambique, Liberia, Senegal, Cameroun and Tunisia.
Attended by about 25 journalists from across the country, the two-day programme, which ended last Thursday, was to build the capacity of journalists to write gender sensitive tax stories.
They were taken through topics, including IFFS, transfer pricing, techniques of uncovering corruption, understanding corporate tax avoidance strategies, loopholes and tax evasion.
BY KINGSLEY ASARE