CSOs call for transfer pricing regulations in mining sector

Civil Society Organisations (CSOs) have called on authorities to strengthen the transfer pricing regulations to help monitor the activities of multinational mining companies in the country.

They alleged that the multinational mining companies are using dubious means to evade taxes in the country.

The CSOs, Tax Justice Network-Africa and Christian Aid in a report said: “Guilty parties are ‘big mining companies’, using dubious means to dodge taxes.

“The situation is compounded by the lack of transfer pricing regulations in the country’s mining sector to properly monitor the activities of multinationals operating in the country.” Programmes Manager for Christian Aid, Ernest Okyere, one of the authors of the report, said these firms always look for loopholes in the system to evade tax.

He observed that in 2012, about US$36million was sent abroad -- mostly to non-taxable offshore accounts on the blind side of tax authorities -- while about US$140million in taxes were lost to the state in the mining sector alone between 2005 and 2007.

Mr. Okyere advised that to be able to properly track such activities, it is necessary to involve both local and international efforts, he stated. “Using their subsidiary companies, they either over-invoice or under-invoice depending on which tax is favourable to them,” he noted.

“Mining firms hide behind transfer pricing to commit the illegal act. The shifting of profits across borders makes it difficult for state authorities to track their activities,” Mr. Okyere said.

However, the acting Chief Executive Officer of the Ghana Chamber of Mines Sulemanu Koney in commending the report said the tax evasion allegations were “unfounded. It is easy to make sweeping statements”.

He also disputed the 2012 budget statement indicating that the nation lost US$36million annually from the mining sector through abusive transfer of pricing.

He explained that government together with civil societies and extractive companies instituted the Extractive Industry Transparency Initiative in 2003, aimed at finding out whether the mining companies were paying what they are expected to pay by law.

“Since 2003 up to 2011, when we had the last report, not a single allegation has been confirmed… they are still untrue and we are waiting for the specific evidence,” he said.