About 50 billion dollars is said to be leaving Africa each year, according to the Thabo Mbeki led High Level Panel report on illicit financial outflows from the continent in 2015.
Majority of these losses, about 50 per cent or more of the total, was as a result of trade mis-invoicing and corruption.
Dr Steve Manteaw, the Coordinator of Campaigns at Integrated Social Development Centre (ISODEC) told the Ghana News Agency that Ghana and other natural resource-rich countries had been exploiting natural assets in the form of solid minerals and others with the view of turning them into revenue to create jobs.
He said ISODEC as part of its research activities had conducted two case studies on transfer pricing in the Oil and Gas sectors and Commodity exports and imports.
He said the study identified the institutional lapses that enabled transfer mis-pricing in the Western Corridor Gas Infrastructure Project and made specific recommendations for plugging those loopholes.
He said the relationship between the transfer unit and other departments of the Ghana Revenue Authority (GRA) appears rather ad hoc as was the case involving the decision to bring Customs Division on board the Transfer Pricing audit of Sinopec.
He said the analysis, further revealed that there was in fact, no automatic sharing of information between GRA and the various institutions in the oil and gas value chain.
He said parliament on the other hand failed to ensure strict adherence to due process and failed to protect the national interest, when it went ahead to ratify the Sinopec tax waiver, two clear years after the Western Corridor Gas Infrastructure Project was completed.
“It is comforting to note that the transfer pricing unit of the GRA has so far retrieved over GH¢ 10 million in additional taxes and penalties raised as a result of ongoing audit of the transaction,” he said.
Dr Manteaw said it was feared that without addressing the identified institutional lapses, Ghana risked more devastating loss of critically needed revenues to finance its development commitments under the Sustainable Development Goals.
He said illicit financial flows was a scourge and a huge source of potentially locked up or misappropriated funds, that if curtailed could free up billions of dollars or resources for development in Ghana and Africa.
He said per the recommendations, government should adopt and use the advance pricing agreement, which could offer an alternative measure of minimising trade mis-pricing.
He said tax authorities should seek cooperation with tax jurisdictions and introduce safeguards requiring that transactions between related parties were assessed on an arm’s-length.
There is the need for further tightening of the rules on ring-fencing, transfer pricing and inter-company interest deductions in the extractive sector contracts and agreements,” he added.