The GRA discovered the tax arrears during a tax assessment that was conducted by its Commissioner-General, Reverend Dr Ammishaddai Owusu-Amoah, on the operations of the mining company, but the outcome of the assessment was contested by the company at the High Court.

In a ruling, the court, presided over by Justice Justin Kofi Dorgu, held that the appeal filed by Perseus was unsuccessful because the company failed to demonstrate that the Commissioner-General erred in applying the tax laws regarding the tax assessment.

“From the forgoing, it is clear to me that Perseus Ghana Limited has not been able to discharge this burden that the assumptions of facts made by the Commissioner-General and the interpretation and or application of the tax laws by the Commissioner-General leading to the objection decision were inaccurate and or wrongly applied to make the decision wrong in law.

“What it means, therefore, is that the appeal cannot succeed and thus fails in its entirety,” the court ruled.

Context

The Commissioner-General in 2013 and 2019, conducted two tax audits into the business activities of Perseus Ghana Limited.

The GRA issued its report on the first audit in September 2013 to cover the periods of 2010 to 2012.

The said audit report was revised on November 25, 2013, which had no liability against the company.

Rather, the assessment resulted in a refund claim of overpaid Value Added Tax (VAT) amounting to about GH¢43.2 million.

Not satisfied with certain parts of the revised tax report, Perseus Ghana Limited filed an objection in January 2014.

Second audit

The second tax audit covered the periods of 2010 to 2017.

The GRA in August 2019 invited Perseus Ghana Limited to a meeting to discuss a draft tax audit report on the second tax audit.

In response, the company raised a number of issues regarding the assessment and called for a review.

Both the GRA and the company met in September 2019 to discuss the draft audit report, which led to the issuance of a final audit report that assessed the company to a total tax liability of about $8.72 million.

However, Perseus Ghana Limited, which was dissatisfied with the final audit report, also objected to the final draft. The company sought further review and paid $2.5 million, representing 30 per cent of the tax liability in dispute as a condition for the determination of the tax objection.

GRA’s objection

Perseus Ghana Limited said after several discussions, exchange of correspondence, reconciliation of figures and meetings, GRA issued its objection decision on March 2021, revising the tax liability to about $10.2 million.

Dissatisfied by GRA’s position on royalties to the government and loss of investment under its forward contract on gold sales, the company appealed the tax authority’s objection that revised the total tax liability to $10.2 million.

Appeal

Perseus filed the appeal to challenge the tax assessment conducted by the GRA, as well as the GRA’s objection that revised the total tax liability to $10.2 million, on the grounds that the GRA erred in applying the tax laws regarding the tax assessment and the objection.

Among other things, it was the case of the company that the GRA erred in law when it re-characterised the gold forward sales contracts in its assessment without proving any of the legal conditions under both the Internal Revenue Act and Tax Act.

The company further averred that the GRA erred when it substituted the contract price (predetermined price) included in its gold forward sale contracts with the spot gold price (prevailing market price) without any factual or legal basis.

“The Respondent erred in law by re-computing additional royalties using spot gold price instead of the contract price included in the gold forward sale contracts at which the Appellant actually sold its gold. The Respondent erred in law by holding that entering into gold forward sales contracts constitutes an investment activity instead of a business activity,” the company noted in its appeal.

Judgment

However, the court held that Perseus had not been able to show that the prices of gold were so erratic that it would be prudent to hedge with a lower price than the prevailing market price.

It added that: “This is more so when gold is not one of the known commodities that has the tendency to fall drastically and for a considerable period”.