Gov’t losing billions bonded warehouses

The laxities in internal revenue collection by government is leading to huge revenue leakages from the system and starving the country of the needed funds to accelerate development. Charles Benoni Okine reports on one of such major leakage points.

The government’s lack of commitment to block the rampant abuse of the bonded warehousing system in the country is said to be creating a financial fortress for owners of the warehouses and importers at the expense of the state.

It is reported that imported goods are kept in the warehouses than necessary later released without the right documentations that will make it possible for the revenue agencies to correctly calculate the taxes due to the state.

The long delays in offloading the goods from the warehouses also allows the importers to do business with funds that would have been paid as taxes to the state to do other businesses at no cost to them.

It is against this background that the Ghana Integrated Community Network Services (GCNet) Limited is urging the government to ensure that the rules governing the use of the bonded warehouses are strictly enforced to enable the government to rake in the needed returns.

The Executive Chairman of the GCNet, Dr Nortey Omaboe, in an answer to a question from the Graphic Business during an interaction with some select media said could not give the amount lost to the state from the abuse of the bonded warehousing scheme except to say that the “figure is substantial”.

In announcing its intention to find new initiatives to raise additional revenue for the state, the 2011 Budget Statement and Government Economic Policy, its stated that “Our warehousing and transit regimes allows importers of finished products, including consumables, to warehouse them for up to two years before payment of assessed taxes”.

It noted that the practice was not consistent with bonded warehousing as temporary customs regime, and imposes cost on the treasury adding that”It amounts to government providing interest free loans to this group of importers”.

As a result, it noted that, henceforth, the boinded warehousing facility wil be restricted to only raw materials for manufacturing as originally intended.

Again in the 2012 Budget statement, it noted that in the course of 2011, a new customs bonded warehousing systems was put into effect in order to improve revenue collection.

The budget noted that the GRA has introduced a system of electronic monitoring in all the bonded warehouses to monitor the movement of goods from the ports into bonded warehouses.

It further noted that the facility is also available to track the movement of goods removed from bonded warehouse for re-export adding that “The over 300 bonded warehouses will be reorganized and the number reduced and then rezoned and sub-offices created to ensure efficiency”.

In spite of this, however, very little seem to have been done and that has created an avenue for rampant abuse resulting in huge revenue loses to the state.

Dr Omaboe said the GCNet was ready to assist the government to block the loopholes to enable the state to accrue the needed funds to enhance development.

Projects of GCNet

GCNet is to spend up to $15 million on the deployment of new system features that will enable it to enhance its operations including revenue collection at the various entry points in the country.

These will include an enhanced permit module and anew warehousing module as well as a feature that enables the local banks to check the status of imports/exports which they have financed in the system.

There will also be an interface of the Ghana Customs Management System (GCMS) with the Ghana Integrated Financial management Information Systems (GIFMIS) deployed by the Ministry of Finance and Economic Planning to enable the ministry and the Ghana Revenue Authority (GRA) have a complete picture of revenue inflows and expenditures therefrom for effective budgeting purposes.

Under the e-Governance Project, GCNet is undertaking for the GRA and the Registrar General Department to automate company and TIN registration, electronic assessment and the filling of income and related domestic taxes electronically.

The new system, Trade Related Aspects of Intellectual Property Rights (TRIPS) among others have been deployed at the headquarters of the Registrar General’s Department and a few at the GRA tax offices and will be extended to a number of regional tax offices during the course of the year.

The company has also been able to deploy its services to all customs stations and approximately 98 per cent of Customs revenue is collected through the system.

Since its inception, GCNet has undertaken continuous system improvements to enable its system operate at the leading edge of technology.

 Dr Omaboe said the latest ICT hardware and software are also to be deployed and there is a conscious effort for the GCNet to maintain its trailblazing role that it made it to deploy the first electronic tracking system in Africa for Ghana Customs.

On his part, the Executive Chairman of GCNet, Mr Nortey Omaboe, noted that the GCNet project is a clear demonstration of how effectively and efficiently the public and private sectors can work in partnership for the mutual benefit of the country.

“As a public-private partnership (PP), GCNet is obliged to interact frequently with both the public and private sectors; As one of the first PPPs to be incorporated in Ghana it has worked very well and brought remarkable results in the delivery of service”, he said adding that “As a result, GCNet is recognized as a model PPP and successful provider of e-governance services”.

Mr Omaboe said the GCNet service, through the automated system brings about significant changes in the manner in which trade revenue mobilization processes are conducted.

“Change management often encounters resistance and GCNet also faces challenges in its operations” he said.

He, therefore, called for the support of the media to disseminate the positive works of the company to enable it to overcome some of the challenges and misconceptions that GCNet encounters in the delivery of its service