Ghana gets first mention in Financial Secrecy Index, ranks 45th: tax dodging, banking secrecy cited
Ghana has been named for the first time in the 2011 Financial Secrecy Index (FSI) and the country ranks at 44, since the index started in 2009.
The Financial Secrecy Index is a tool for understanding global financial secrecy, corruption and illicit financial flows. It is conducted annually by the Christian Aid of the UK and the Tax Justice Network, NGOs.
One of the factors cited for the country’s entry and position is the dodging of taxes by companies under the pretext of tax haven secrecy.
The 2011 FSI released October 4, 2011 ranked Ghana 45th among 73 secrecy jurisdictions or countries.
The country had 79% of secrecy of a value score of 146.8.
The secrecy score for Ghana, according to the Index has been computed by assessing the jurisdiction’s performance on the 15 Key Financial Secrecy Indicators such as Banking secrecy; Trust and Foundations Register; Recorded Company Ownership; Public Company Ownership; Public Company Accounts among others.
“Ghana does not adequately curtail banking secrecy…Ghana does not require resident paying agents to tell the domestic tax authorities about payments to non-residents,” two of the 15 key indicators said.
Other new entrants from Africa are Botswana and Mauritius.
According to Alvin Mosioma, Co-ordinator of Tax Justice Network, Africa, it is worrying that Ghana and Botswana have joined the Index as both countries are been encouraged in ‘some quarters’ to move towards tax haven status.
“Until recently, Mauritius was the only African tax haven. It is deeply worrying to see these two newcomers being encouraged in some quarters to move towards tax haven status emerge given the damaging effect tax haven secrecy has on developing countries,” said Mosioma in a statement commenting on the Index.
Mosioma adds that “Such efforts undermine the ongoing process at the African Union to address illicit financial flows from the continent.”
On how to deal with these tax evasions by companies and individuals, the FSI snapshot on the country says, “Ghana must still make major progress in offering satisfactory financial transparency. If it wishes to play a full part in the modern financial community and to impede and deter illicit financial flows, including flows originating from tax evasion, aggressive tax avoidance practices, corrupt practices and criminal activities, it should take action on the points noted where it falls short of acceptable international standards.”
The Index indicated that the ranking was based on a combination of the country’s secrecy score and a scale weighting based on its share of the global market for offshore financial services.
The Index noted that Ghana accounts for under 1% of the global market for offshore financial services, making it a tiny player compared with other secrecy jurisdictions.
It highlighted some challenges the country faces.
“Other challenges remain outstanding if Ghana is to improve on its weak secrecy score of 79. Notably, steps need to be taken to improve access to company ownership, to require disclosure of information about trusts, and to strengthen anti-money laundering processes. “
It noted that the country’s ranking was also based on regulatory reports, legislation, regulation and news available as at December 31, 2010.
A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate, Wikipedia defines.
By Ekow Quandzie