Ghana loses $36m annually through tax evasion – OPDAG

The Oil Palm Development Association of Ghana (OPDAG) has disclosed that the country loses $36,000,000 through tax evasion due to the introduction of the benchmark policy.

According to OPDAG, the policy has legitimised under-invoicing to an estimated undeclared importation of approximately 6,000 to 7,000 metric tonnes per month.

This has led to a loss in revenue through tax evasion, estimated to cost the country $3,000,000 per month, translating into $36 million annually.

Therefore, the OPDAG has called on the government to urgently put measures to avert this situation to save the country money while improving its revenue collection efforts.

In addition, OPDAG has asked the government to exempt them from the implementation of the 50% reduction benchmark policy, noting that since its introduction in 2019, it has adversely affected the local palm oil industry.

In an interview with The Ghana Report, the Executive Secretary of the Association, Selorm Quame, said, “we want a review so that commodities with local production capacity will be exempted from the 50% reduction benchmark policy.”

The under-invoicing has led to “the flooding of our markets with subsidised and substandard vegetable oils”.

He, however, noted that contrary to the call by the Ghana Union of Traders Association (GUTA), they are not advocating the complete abolishment of the policy.

Mr Quame stated that due to the policy, the local refineries and manufacturing industries are no longer viable, resulting in huge losses at the downstream value chain, including small and large oil palm growers.

“The refineries are unable to sell their products competitively against imported vegetable oil, which has become cheaper as a result of the effect of benchmark policy which in essence has subsidised the imports to the disadvantage of local producers,” he lamented.

Providing figures to paint a picture of the situation, the Executive Secretary of OPDAG, said, “the cost of a 25-litre jerrycan of vegetable oil produced locally costs GH₵ 260 ex-factory price.

This is sold on the market for GH₵ 265 inclusive of the duty, levies, VAT and logistics. But the imported vegetable oil leaves the port at GH₵ 230 and are sold to traders at GH₵ 255 for onward selling on the market at GH₵ 260.”

“This means GUTA is not actually fighting for traders but a handful of importers who are making huge profits, while Ghanaians are at the risk of losing jobs and subsequently livelihoods at the downstream where hundreds of thousands of rural smallholder/out-grower farmers operate,” he noted.

According to Mr Quame, they have been experiencing job and income losses, especially in rural areas where local mills and smallholder farmers are actively engaged in the oil palm value chain due to the policy.

“A mill that had 500 employees has downsized to 250 employees as at the beginning of 2021,” he lamented.

He explained that before the passing of the 50% benchmark policy, the Association, together with the Ministry of Food and Agriculture and the Customs Division of the Ghana Revenue Authority (GRA), were fighting the practice of undeclared vegetable oil imports.

He also stated that if not reviewed, the policy of Planting for Export and Rural Development (PERD) would be in danger of achieving its desired objectives.

The achievement of the Tree Crops Development Authority Act (Act 1010, 2019) would also be at risk due to the current state if the benchmark policy.