Do not introduce new machines for excise tax stamp system – FABAG to GRA

The Food and Beverages Association of Ghana (FABAG) has asked the Ghana Revenue Authority to avoid the introduction of new machines for the excise stamp system.

It said that its members are satisfied with the current machines they have installed in their facilities to facilitate their compliance effort towards the successful payment of the Excise Tax stamp.

“We are by all humility unequivocally reiterating our rejection of any moves to introduce new machines to replace what we currently use in our facilities for the Excise Tax Stamp System,” the Association said in a release on September 24, 2024.

They stated their reasons for the rejection as follows:

1. Their members (manufacturers) are yet to recover the cost incurred in the procurement and installation of the machines they were made to buy to facilitate compliance with the Excise Tax Stamp payment as a result of the implementation of the Tax Stamp Act 2013 (Act 873)

2. That the machines in use in fulfilment of the compliance obligations of manufacturers is running smoothly without any complaints from the GRA in the domain of reported losses of revenue due to any identified system deficiencies; reported in any irreversible transactions from audit trails with very heavy irrecoverable revenue losses/leakages.

3. That indeed, most players acquired their machines as recent as 2020 and any replacement at this time will mean that GRA is not bothered about the heavy financial burden that one has to go through to enable it to pay its due to the state/government. The long-standing working capital inadequacy challenges is going to be compounded by any forced introduction of a new machine.

4. The introduction of the new machines is seen to be a means of introducing a system that will forcefully fuse in a certain personality with the dominant of characteristics of monopoly as the intermediary between the GRA and the manufacturer in the performance of the statutory functions of revenue mobilisation by the GRA. We will interpret any arrangement to replace our current machines as a calculated scheme to exploit the manufacturer rather making payment of the stamp convenient. The cost of payment becomes the middle- man's earnings; and since the GRA, by enforcement directives creates an inelastic demand for the machines (digital printers), and the special ink, the GRA really maybe seen as an exploiter in the compliance chain.

Read the full statement

DO NOT INTRODUCE NEW MACHINES FOR EXCISE TAX STAMP SYSTEM - FABAG

The Food and Beverages Association of Ghana (FABAG) hereby notifies the Ghana Revenue Authority (GRA) that its members are satisfied with the current machines they have installed in their facilities to facilitate their compliance effort towards the successful payment of the Excise Tax stamp.

We are by all humility unequivocally reiterating our rejection of any moves to introduce new machines to replace what we currently use in our facilities for the Excise Tax Stamp System. The following are our reasons:

• that our members (manufacturers are yet to recover the cost incurred in the procurement and installation of the machines they were made to buy to facilitate compliance with the Excise Tax Stamp payment as a result of the implementation of the Tax Stamp Act 2013 (Act 873).

• That the machines in use in fulfilment of the compliance obligations of manufacturers is running smoothly without any complaints from the GRA in the domain of reported losses of revenue due to any identified system deficiencies; reported in any irreversible transactions from audit trails with very heavy irrecoverable revenue losses/ leakages.

• That indeed, most players acquired their machines as recent as 2020 and any replacement at this time will mean that GRA is not bothered about the heavy financial burden that one has to go through to enable it to pay its due to the State/ Government. The long-standing working capital inadequacy challenges is going to be compounded by any forced introduction of a new machine.

• The introduction of the new machines is seen to be a means of introducing a system that will forcefully fuse in a certain personality with the dominant of characteristics of monopoly as the intermediary between the GRA and the manufacturer in the performance of the statutory functions of revenue mobilisation by the GRA. We will interpret any arrangement to replace our current machines as a calculated scheme to exploit the manufacturer rather making payment of the stamp convenient. The cost of payment becomes the middle- man's earnings; and since the GRA, by enforcement directives creates an inelastic demand for the machines (digital printers), and the special ink, the GRA really maybe seen as an exploiter in the compliance chain.

• We are therefore by this press release calling on the government through the finance minister and Minister of Trade and Industry to immediately halt any moves by the GRA to introduce any new digital machines for the Excise Tax stamp system to replace the existing ones. As noted earlier, the current system is running smoothly with no registered or known complains by industry.

• Indeed, businesses are going through a lot of foreign exchange losses this year due to the massive depreciation of the cedi. Whilst it is still not so clear whether industry will be making any gains to minimize the current burden. GRA is trying to multiply our woes of working capital deficiencies amidst heavy loan interest and foreign losses by introducing another financial commitment turbulence.

• We cannot suddenly be buffeted with issues of buying new machines, installation, caliberation and training of our staff from now to the Christmas season, let us be reminded that it is barely left with four (4) months for the year to end. As we understand, aside the cost of the new machines, the average factory will spend millions of United States Dollars each year on this new system.

Whilst we are still worried about the moves of the GRA to enforce this as part of its statutory duties, we have the following questions for all of us.

(i) What is going to happen to the current machines industry incurred huge cost to purchase and install at their respective facilities?

(ii) Is GRA ready to pay for the cost of those machines as well as finance the new ones since they are supposed to be customized installations for the purpose of revenue mobilisation only for the GRA?

(iii) Why at all should a company buy a machine to enable it pay stamp duty?

(iv) Why should GRA now depend on a commercial dealer of a specific machine operating system to collect and report on its taxes without any transparent audit trail its tax?

(v) How much is each player going to incur to purchase these machines?

(vi) who caters for the installation and maintenance cost of the machines?

(v) Who regulates the machine dealer?

(vii) Is the machine dealer a statutory agency for tax collection?

(viii) Is the data from the machine operation a constituent part of the GRA audit trail?

(ix) What exactly is the motivation for this move?

These and many more questions remain unanswered, as our partner GRA considers introducing this foreign businessman and his machines to our members which will disrupt a lot of processes with resultant negative effect on national/ statutory revenue collection.

Much as we are open to new ideas and strategies to improve the operations of our businesses and tax collection in collaboration with the GRA, we plead that it must always be done with high level of sensitivity. Businesses in Ghana are currently reeling under tremendous pressure from forces buffeted from various angles. Nothing calls for the change of machines at this time of the season and year.

Thank you.

Signed.

Chairman

Rev. John Awuni

0244311041

SSD/GA

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