Golden Gate & ¢28b Tax Evasion

Posted to the web 16 April 2008
Charles Takyi-Boadu
Months of investigations into the activities and operations of the Internal Revenue Service (IRS) has revealed underhand dealings and deliberate cover-up of a massive tax evasion by high-ranking officials of the revenue-collecting agency.
At the centre of the raging controversy is the Commissioner himself, Major Daniel Ablorh-Quarcoo (Rtd), at whose 'discretion' the nation is losing several billions of cedis.
An audit report commissioned by the Commissioner, covering the period of December 31st 2002-2006, into the books of Golden Gate Services limited, a private Stevedoring company, based in Tema, has revealed that the company owed the state to the tune of approximately ¢29billion in tax and penalty liabilities.
A copy of the audit report dated December 23rd 2007, and signed by the Deputy Commissioner In-Charge of Special Duties, D.T Acquaye, for the Commissioner, which is in the possession of The Chronicle, reveals massive tax evasion.
The audit report revealed that the company had underestimated its income to the IRS by a whooping amount of ¢42billion.
It therefore decided to include it in its revised tax computation for the respective years.
For the same period, the IRS noted differences in the company's Direct Cost in the areas of stevedore gear, plant hire expenses, repairs and maintenance, and miscellaneous, whilst it added back items under-listed under General and Administrative expenses which amounted to over ¢17billion.
This included foreign travels, telephone, marketing research, post and telecommunications, software expenses, safety and security.
The rest were in the areas of fuel and lubricants, travel and transport, electricity and water, bank charges, interest, fines and penalty.
In the case of Deferred Liabilities, the IRS said it was not provided with documentary evidence in support of the company's indebtedness to its Directors.
Though the money was supposed to have been paid to the Directors of the company, the Chronicle investigations revealed that there was no evidence to show that any of the Directors received the money. Sources have indicated that the company did not owe any of the Directors as the impression is being created.
The IRS was therefore unable to accept the liabilities of an amount of over ¢24billion as stated in the financial statements for the years under review. For this reason, it resolved to adjust and include it in its tax computation.
Much as the IRS agreed to the fact that in every business operations, there are some public relations, it noted in its report that "we are uncomfortable with the practice whereby at the end of the year, a huge portion of the expenditure is written-off to Suspense Account, and only relatively small portion is shown in the financial statements."
It was therefore compelled by prevailing circumstance to add back to profit, the write-offs in the years 2005-2006, which amounted to over ¢2billion.
Though the revenue collecting agency had no evidence of the company's Directors recommending the payment of Dividend in 2005 and 2006, available records indicated that the payments were made as Dividend to the tune of over ¢2billion.
The IRS thus imposed a 300% penalty for non-disclosure with a 10% tax, all amounting to over ¢1billion.
Further, the IRS detected an overstatement of the company's Salaries and Wages account in 2005, by over ¢373million and included it in its tax computation. Since the said account did not suffer tax, the IRS decided to subject same to tax at a marginal rate of 5%.
Contrary to the provisions of sections 3 and 83 of the Internal Revenue Act 2000, Act 592 as amended, Golden Gate Services limited failed to withhold taxes on payment for services rendered by third parties.
For that matter, the IRS computed the appropriate withholding taxes amounting to over ¢229million and added same to the company's tax liability in accordance with Section 88 of the Internal Revenue Act 2000, Act 519 as amended.
After the auditing, Golden Gate Services' total tax and penalty liability payable stood at approximately ¢29billion.
An interim audit report cited by The Chronicle and dated November 9th 2007, indicated that the company's tax and penalty liability was over ¢41billion but was later scaled down after final report.
In order to have its operational license renewed, the Ghana Ports and Habours Authority (GPHA) asked the company to settle the indebtedness of its tax liability for the years under review.