What was expected to be a landmark tax dispute case in Ghana if it had gone to its logical conclusion in open court, may not be as Vodafone Ghana has opted to discontinue the legal suit it brought against the Ghana Revenue Authority (GRA) currently under adjudication at the Commercial Division of the High Court in Accra.
Counsel for Vodafone Ghana, Kwesi Fynn told the court on Thursday March 8, 2018 that he had the instructions of his clients to discontinue what many have described as a high-profile tax case.
“My Lord, today I have good news. My client has decided to discontinue the action following fruitful discussions between them and GRA”, Fynn told the Court presided over by Justice George Koomson who then directed the applicants to file the notice of discontinuation.
It is unclear what the two; Vodafone and GRA have agreed to but the Director of Legal at Vodafone, Mrs Geta Striggner-Quartey who was in court later told ghanabusinessnews.com that they have had “productive talks with GRA” over issues in contention, the reason for their latest decision.
The case has been adjourned till March 13, 2018.
Vodafone Ghana filed a motion at the Court against the GRA disputing tax assessments of GH¢160 million, according to the Writ obtained by ghanabusinessnews.com. The GRA has asked Vodafone to pay 30 per cent of the stated assessment while negotiations continue, which is according to the Ghana Revenue Act, but Vodafone refused to pay and instead requested for a waiver from the Commissioner-General. The law allows the Commissioner-General to exercise discretion on granting wavers in such matters. The 30 per cent of the amount is to the tune of GH¢49 million.
The Court was to have heard a motion for an amended writ filled after the substantive case filed by Vodafone when it reconvened on Thursday, March 8.
The facts of the case are that Vodafone PLC bought 70 per cent stake in the then Ghana Telecoms for $900 million in July 2008 and since 2009, the company claims it is not making any profit even though it is said to have been remitting funds to its parent company.
The GRA after an assessment of Vodafone’s turnover for a three-year period amounting to GH¢540 million, imposed tax liabilities of GH¢162 million on it and asked the company to pay 30 per cent of the stated assessment while negotiations continue, as allowed by the tax laws.
Vodafone then sued the tax agency asking the court to compel the Commissioner-General to determine its request for a waiver of the said payment of GH¢49 million.
But even before the substantive case could be heard, Vodafone filed an amendment to its original writ, stating that; “Take Notice that this Honourable Court will be moved by counsel for the Applicant/Applicant (“Applicant”) herein for an order granting leave to: vary/modify the reliefs sought in this suit to read as follows: An order of certiorari, bringing up and quashing the decision of the Respondent dated 4th October 2017 refusing the Applicant’s request for a waiver of the payment of the 30 per cent of the disputed assessment pending the objection determination, on the grounds that the decision resulted from an improper exercise of the discretion vested in the Respondent by section 42 (6) of the Revenue Administration Act, 2016 (Act 915) and in contravention of article 296(a) and 9b) of the Constitution, 1992”.
Vodafone has alleged arbitrariness and harassment on the part of GRA, an allegation the GRA has disputed.
“If we destroy businesses, how do we collect taxes?” Asked, Kwasi Bobbie-Ansah, the GRA’s Communications Director, adding, “we do not act illegally”, he told ghanabusinessnews.com when the case started.
In the substantive case, Vodafone’s contention is that in July 2017, the Transfer Pricing Unit of the GRA conducted a Transfer Pricing audit of the company for the 2012 – 2016 years of assessment. But Vodafone disagreed with the GRA’s use of the Technology Transfer Regulations, 1992 (L.I. 1547) instead of the Transfer Pricing Regulations, 2012 (L.I. 2188,) in the audit exercise, the court documents obtained by ghanabusinessnews.com shows.
In a back and forth correspondence between the two, the GRA counteracts Vodafone’s assertions by arguing that after subjecting the company’s transactions to the Technology Transfer Regulation 1992, (L.I. 1547), it established that the transactions do not meet the Arm’s Length Test.
Following several meetings to resolve the matter, the GRA asked Vodafone to submit its grievances in writing. That was done through its consultants, KPMG, the documents state.
According to the Writ, Vodafone while waiting for a response from the GRA, it instead received an audit report with a tax assessment of GH¢162,468,361.90 from the Transfer Pricing Unit of the GRA, which demanded that the stated assessment should be paid within 14 days. Vodafone however, objected to the demand.
The writ filed at the Commercial Court in Accra, and lists Vodafone Ghana as Ghana Telecommunications Co. Ltd, states that “the lawyers of the Applicant shall move this Honourable Court praying for an order of certiorari, bringing up and quashing the decision of the Respondent demanding payment of 30 per cent of a disputed tax assessment and for an order of mandamus compelling the Respondent to determine the Applicant’s request for a waiver of said payment.”
By Emmanuel K. Dogbevi & Emmanuel J. K. Arthur
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