The 2022 Auditor-General’s report has revealed that some tax irregularities by some public institutions including the Electricity Company of Ghana cost the country about GHS12.9 million.

This comes at the same time the finance Minister, Ken Ofori-Atta revealed in the Mid-year Budget Review that Value Added Tax, which is a key revenue measure, has largely underperformed and is calling for more efforts to enhance compliance

According to the report, the tax irregularities are related to failure to pay statutory tax deductions, non-deduction of applicable taxes and transacting business with non-VAT registered persons or entities.

Out of the total of GHS12.9 million revenue lost, MASLOC owes GHS6.26 million to the Ghana Revenue Authority as unpaid statutory deductions. This was  in taxes withheld on employment income.

Volta Star Textiles Limited has not remitted taxes withheld on employment income (PAYE) and payments for the supply of goods, services, and works, totaling GHS2.49 million and GHS502,032.28, respectively, over the past three years. Additionally, the company has yet to remit GHS467,730 as VAT output payable to the GRA.

According to Section 59 of the Value Added Tax Act, 2013 (Act 870), any individual who takes possession of or engages in transactions involving goods or accepts the supply of goods or services, and has reason to believe that the tax on those goods or services has not been or will not be paid, or that the tax claimed has been or will be falsely reclaimed, is considered to have committed an offence.

The audit of the Electricity Company of Ghana (ECG) revealed several instances of Management making payments to non-VAT registered entities for the supply of goods and services. At the Head Office, payments amounting to GHS1.08 million were made through 67 payment advices, resulting in a loss of tax revenue of GHS91,671.12.

Similarly, at the ECG Western Region, payments totaling GHS1.43 million were made through ninety-eight payment advices, leading to a loss of tax revenue of GHS275,121.28.

At the Tema Depot, payments of GHS786,909.39 were made through ninety-four payment advices, causing a loss of tax revenue of GHS198,694.71. These transactions with non-VAT registered entities resulted in significant revenue losses for the company.

Background

The 2022 Auditor General Report has uncovered total irregularities of GHS15.059 billion among Public Boards, Corporations and other Statutory Institutions.

According to the report, most of the irregularity categories decreased in 2022 compared with the 2021 financial year even though 113 Institutions were audited and reported on in 2022 compared with the 101 Institutions audited and reported in 2021.

It is important to note that the 2022 total irregularities of GHS15.059 billion was made up of a recoverable amount of ¢15,012 billion and an administrative infraction of GHS47.285, million.

The administrative irregularities were made up of procurement irregularities and other procedural infractions and lapses in public financial management. These administrative irregularities, the report said, do not connote loss of funds.