Rescind directive on warehousing regime – AGI tells GRA

Date: 2018-10-18

The current warehousing regime, wherein producers must make full up-front payment of duty on imported raw materials, defeats government’s vision of promoting industrialization and needs to be reviewed, the Association of Ghana Industries (AGI) has said.

The concept of inbound warehousing is that when a manufacturer brings in raw materials, the company does not pay the entire duty up-front; it is kept in a Customs bonded warehouse and as and when a certain volume is needed the manufacturer picks it and pays the duty on it.

This policy was however abandoned by the Ghana Revenue Authority (GRA) in 2017, because of what the GRA describes as persistent abuses of the system.

“I do not see why we should have a blanket policy that affects everybody,” Mr. Twum-Akwaboah argued, adding that policies of such nature do not augur well for manufacturers.

“We cannot be saying one thing and be doing another in terms of our policies; we risk giving our market out to our competitors in the sub-region who are ready to cash in because of the Common External Tariff within ECOWAS.”

He explained that if one imports in bits, the person ends up paying so much for the war material – which also goes to increase the cost of the final product – but “if you increase the quantity you will get it at a much lower price”.

“In order to be competitive, some of our members import in large volumes; but if you say we should pay all the duties up-front when in reality it is going to take me about six months or more to produce, sell and make some money and you are demanding me to pay the duty up-front, then it is problematic; it means that I must go and borrow money to lay the duty.

So what we are saying is let us re-consider that position. We appreciate that there could be abuses, but why don’t we police the system in a way that prevents such abuses and punish those who are cheating the system?” he advocated.

Mr. Twum-Akwaboah further suggested that the Association could work hand-in-hand with the Customs Division of the GRA to improve the system, by giving special dispensation to companies which have genuine demands of such nature and have over the years conducted business in accordance with Customs’ rules.

This, the AGI CEO indicated, will go a long way in protecting already-burdened domestic manufacturers which have to contend with several tax loads including the 5% VAT levy, tax stamps, among others.

“We have to be very careful about some of these policies; that is why it is always important to engage stakeholders before coming up with such policies,” he indicated, adding: :If the government had engaged us, we would have been able to give the exceptional cases to be tackled.

“But when we come out with generic policies without doing detailed work, we rather end up causing more damage and we will not be able to generate the revenues that we expect,” he lamented.

 

Abuses necessitated changes – GRA

According to Bob Senyalah, Assistant Commissioner in Charge of Customs at the GRA, constant abuses of the suspense duty system – such as diversion in the name of warehousing and taking goods out from warehouses without proper warehousing processes – led to the current regime.

“We also had issues with purported re-exportation whereby goods are taken from the warehouse in the name of re-exportation only for them to be diverted onto the Ghanaian market. When this happens, government loses a lot of revenue because duties due the state are not paid,” Mr. Senyalah told the B&FT.  

 Source: B&FT