The Akosombo Textile Limited (ATL) and its sister company Akotex Synthetics Limited have been shut down following their failure to honour their tax obligations in the last four years.
Since 2009, the two companies, which are under the same management, have not been paying Value Added Tax (VAT) and Pay As You Earn (PAYE) to the Ghana Revenue Authority (GRA).
Despite efforts by the tax administrators to collect the revenue due the state, the amount, which is in excess of GH¢8 million, has been outstanding while the company continues to operate.
A breakdown of the tax liability indicate that ATL has over the years not paid VAT amounting to GH¢4.1 million and PAYE of GH¢1.6 million while its sister company Akotex also owe the state VAT of GH¢2.772,283 and PAYE of GH¢415,434.
In line with Section 34 (3) of the VAT Act 546 enacted in 1998, the Revenue Authority resorted to the last option under the law to retrieve the money due the state in a distress action.
A team from GRA with assistance from police officers, locked up the head office of the companies.
The team, which was led by Wisdom Kofi Xetor, Principal Public Relations Officer of the Authority’s Large Tax Payers Unit, gave the management the option of paying the debt immediately or handing over the keys to the property.
However after several minutes an agreement could not be reached.
The team took an inventory of the property while workers of the two companies were compelled to close for the day early.
Mr Xetor told journalists that since October 28, 2011, the GRA has been trying to get the management of the two companies to arrange a term of payment “but it has not yielded any result.”
He said options explored in the past four years included issuance of an immediate demand notice asking the companies to pay the liability which was followed by a final demand notice after some grace period.
Additionally, the GRA under section 33 of VAT Act 1998, Act 546 exercised the garnishee order which permits the authority to freeze the bank accounts of the two companies but that did not make the companies pay the tax debt.
“We agree the textile industry is experiencing challenges, that is why we have waited for this long,” said Mr Xetor when he was asked why it took the tax administrators four years to undertake the distress action.
Records at the GRA, Mr Xetor said, showed that the two companies are in business and “since VAT is a consumption tax and PAYE is a tax on income it means as far as they are selling they should be making good their liabilities.”
He added that the two companies in the past years have filed their returns but failed to pay the taxes to revenue collectors.
“We have exhausted all the options available and we have to enforce the law,” said the Principal PRO.
Initially, workers were reluctant to receive the warrant signed by the Commissioner of the GRA, George Blankson, which mandated the team to recover the debt or confiscate the property belonging to the debtors including facilities used in Ghana in the manufacture, production, sale or distribution of any taxable supplies found in the premises.
A red tap was used to seal the entrance of the company. According to GRA, it is an offence for any worker or management to make unauthorized entry.
