The partnership between the two countries will allow Ghana “to automatically receive tax information” from HM Revenue and Customs (HMRC) on UK holdings of Ghanaian taxpayers from 2018, the UK government said on Thursday.
The reciprocal arrangement will help “detect undeclared assets, catch tax evaders and deter potential tax evaders”, the UK said. “HMRC is partnering with the Ghana Revenue Authority (GRA) to develop their expertise on tax legislation, compliance and data privacy so they are ready for the automatic exchange of tax information in 2018.”
Tax expert Heather Self of Pinsent Masons, the law firm behind Out-law.com, said: “As the Organisation for Economic Co-operation and Development’s base erosion and profit shifting (OECD BEPS) project moves towards a conclusion, many people have expressed concern about the resources poorer countries will need to participate effectively in the fight against tax evasion.”
“This practical support by the UK government for Ghana, including a focus on building robust systems and processes, is excellent news,” Self said.
Ghana’s finance minister Seth Terkper said his country was committed to a “united international onslaught on tax evasion through transparency and exchange of information”. He said the “menace” of tax evasion “can effectively be eliminated only through international cooperation”.
Terkper said: “In order to boost revenue generation, Ghana is ready to join the global effort to control tax evasion. The collaboration with the UK is bound to profit the two countries and Ghana’s revenue generation efforts will be enhanced.”
UK international development secretary Justine Greening said the initiative could help Ghana “reclaim millions of pounds in lost revenue”.
Financial secretary to the UK Treasury David Gauke said: “Sharing our tax expertise will help the Ghanaian taxman have the systems in place to make the most of the tax information they receive from over 90 countries come 2018.”
According to the UK, more than 90 countries have signed up to a ‘global standard’ for the automatic exchange of tax information by governments, that was agreed in 2014 by finance ministers of the G20 group of nations. The UK said the initiative, which pledges support to developing countries that wish to participate, is set to come into force “by 2017 or the end of 2018”.
The UK said it already provides Ghana with assistance on tax and continues to support international institutions in providing technical assistance to developing countries to introduce exchange of information. “We also fund the Global Forum’s Africa Initiative, which raises awareness of exchange of information as a means to tackle tax evasion in Africa,” the UK government said.
Last month, the UK joined the US, Germany, the Netherlands, Ethiopia, Kenya and other nations in launching the ‘Addis Tax Initiative’, under which donor countries have committed to doubling their support for tax reform in the developing world by 2020. “Meanwhile developing nations commit to step up their work on tax reform to improve the fairness, transparency, efficiency and effectiveness of their tax systems,” the UK said.
In April 2014, Ghana’s finance ministry said it was changing tax exemptions procedures to “minimise abuse”. In addition the ministry said the Ghana Investment Promotion Centre (GIPC) Act would be reviewed “to ensure that (tax) exemptions granted by the GIPC were consistent with the government’s exemption policy”.
Also in 2014, Ghana’s cabinet approved draft legislation aimed at improving transparency and governance in the exploration and production of oil in the country.
Earlier this year, Ghana’s government signed a memorandum of understanding with the Netherlands as part of moves to combat tax evasion. The state-run Ghana News Agency said the agreement would allow both countries to “automatically provide each other with information about income from immovable property earned by residents of either country, dividends, interest, directors’ fees and income of artists and sportsmen”.