Despite concerns expressed by the Food and Beverage Association of Ghana (FBAG) about the enforcement of the Excise Tax Stamp Act, 2013 (Act 873), the Ministry of Finance says it will enforce the Act from Thursday, March 1.
Companies and importers of cigarettes and other tobacco products, beverages and bottled water who fail to comply with the deadline risk being sanctioned under the law.
In a statement signed by a Deputy Minister of Finance, Mr Kwaku Kwarteng, and issued in Accra on Wednesday, the ministry said enforcement would begin earnestly on March 1, this year at the various points of sale for excisable products captured under the law.
“More than four (4) years after the law came into force; government’s commitment now to the enforcement of the Excise Tax Stamp Act is total.
“In the last nine months, the government has been engaging with eligible businesses on the implementation of this policy and will continue to listen to the concerns of businesses.
“However, such expression of concern cannot be a substitute for obeying the law,” it said.
The position of the ministry on the tax stamp policy means that starting from March 1, manufacturers and importers of cigarettes and other tobacco products, beverages and water will have to affix Ghana Revenue Authority (GRA) stamps on their products before they are allowed onto the market for sale.
The statement explained that the stamps were to enable the GRA to “assess the exact tax liability of these manufacturers and importers to minimise the under-declaration of sales and import volumes”.
“The stamping of products will also help the government identify fake and counterfeit goods and strengthen effort to fight the smuggling of these fake and counterfeit goods into the country,” it added.
It explained that prior to the March 1 enforcement date, affected businesses were given enough time to “prepare towards compliance,” hence the decision to proceed with the enforcement as planned”.
“On August 31, 2017, the government announced its intention to enforce the Excise Tax Stamp Act at points of sale from March 1, 2018.
“This was to give eligible businesses enough time to prepare towards compliance. Indeed, eligible businesses have had more than 48 months to prepare towards compliance with the law, which received presidential accent on January 31, 2014,” it said.
Resistance from businesses
Last Monday, the affected businesses called on the government to suspend the enforcement to allow for increased dialogue aimed at finding a less costly method of implementation.
The Food and Beverage Association of Ghana (FBAG), a group of manufacturers and importers, had told the Daily Graphic that while they were proposing a digital system that would electronically emboss the stamps on all excisable products, the government had opted for the physical affixing of the stamps by a specialised machine in the course of production.
The Executive Secretary of the FBAG, Mr Samuel Aggrey, said the government’s mode of implementation was costly and injurious to the operations of manufacturers.
On the cost, he said the government’s mode of implementation could require each company to invest as high as US$3 million before it could comply with the law.
“Beyond the issue with speed, one is to invest between US$500,000 and US$3 million before getting the tax stamp rolling and we are asking: why should it be so?
“We don’t see why a law will ask someone to invest US$3 million or even US$100,000 and if the person does not have it, it amounts to committing a crime,” he told the Daily Graphic last Friday.
Checks by the paper also showed that no beverage manufacturer, including Guinness Ghana Breweries Limited, Kasapreko Company Limited, Voltic Ghana Limited, Accra Brewery Limited, Pepsi Ghana Limited and Coca-Cola Bottling Company Limited, had procured or installed the tax stamp affixing machine needed for the smooth enforcement of the policy.
At a press conference on February 21, the Executive Secretary of the FBAG had said members of the association would not hesitate to withdraw their products from the market and shut down production lines if the government went ahead to enforce the act.
In apparent response to the concerns of the manufacturers, the ministry said businesses were at liberty to choose whatever option they deemed fit when it came to the enforcement of the law.
“Since January 1, 2018, businesses have been entitled to free tax stamps and free affixing of stamps at the ports and it will be so for six (6) months.
“Further, the government has passed a law to grant businesses accelerated capital allowance on the cost of procuring affixing machines.
“While the government has taken these and other steps to facilitate the affixing of the tax stamps to products, the responsibility for doing so rests squarely with the manufacturers and importers of those products.
“Accordingly, eligible businesses are free to use any means of their own choice to affix the prescribed stamps to their products and at the lowest cost to their operations,” the statement said.
It went further to state that several companies had already “acquired the stamps and have affixed them to their products on the market ahead of the enforcement start date”.
“The country is grateful to these law-abiding businesses,” it added.
Products that are affected by the policy include cigarettes and other tobacco products, alcoholic and non-alcoholic beverages and bottled water.