GHANA: High Court rules that payment of minimum disputed amount is a prerequisite for filing an appeal

GHANA: High Court rules that payment of minimum disputed amount is a prerequisite for filing an appeal

by Renier van Rensburg

The Commercial Division of the High Court, in its decision of 13 July 2018, in the case of Beiersdorf Ghana Limited v. The Commissioner General of the Ghana Revenue Authority (CM/TAX/0001/2018), ruled that the payment of at least a quarter of the tax liabilityTax liability represents the total amount of tax owed by an individual or business to a tax authority, whether local, national, or international. This obligation arises through various forms of income, profits, or transactions subject to taxation laws and regulations. Understanding tax liability is essential for compliance and efficient financial management for corporations and individuals. It influences how businesses structure... contained in a disputed notice of assessment in the first quarter of the year of assessment is a prerequisite for filing a tax appeal in accordance with Rule 4 of Order 54 of the High Court (Civil Procedures) Rules 2004.

In the case at hand, the Ghana Revenue AuthorityTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is... (“GRA”) conducted a tax auditA Tax Audit is a comprehensive review or examination conducted by a government’s tax authority. The primary objective of a tax audit is to verify the accuracy of a taxpayer's financial records, tax returns, and overall tax compliance. This process ensures that the reported income, expenses, and deductions align with the applicable tax laws and regulations. Tax audits serve as... on Beiersdorf Ghana Limited (“BGL”) and issued an additional tax assessmentA tax assessment is a formal determination made by a tax authority to calculate the amount of tax an individual or entity owes. It is a comprehensive evaluation based on financial records, declared income, expenses, deductions, and any applicable tax laws or regulations. Tax assessments may arise from routine self-assessments by taxpayers, or they may be conducted by revenue authorities..., disallowing royalty payments made in accordance with a distribution licence on the basis that the agreement was not registered as a technology transfer agreement with the Ghana Investment Promotion Centre (“GIPC”).

BGL objected on the basis that the distribution licence agreement is not a technology transfer agreement as contemplated by the GIPC Act (Act 865) and was, therefore, not required to be registered with the GIPC. BGL also disagreed with the GRA recharacterising reimbursements paid to its distributors for work done by third-party vendors as sales commission and subjecting such payments to withholding tax.

The GRA subsequently issued a revised assessment taking into consideration tax credits to which BLG was entitled, but BGL disagreed with the revised assessment and filed an appeal with the High Court.

The High Court ruled in favour of the GRA on the basis that it was precluded from hearing the appeal because BGL failed to provide evidence of the payment of at least a quarter of the tax due in the notice of appeal and hence, the appeal was not properly filed.