BEIERSDORF GHANA LIMITED v. THE COMMISSIONER GENERAL, GHANA REVENUE AUTHORITY
2018
HIGH COURT
GHANA
CORAM
- Samuel K. A. Asiedu
Areas of Law
- Tax Law
- Evidence Law
- Commercial Law
- Administrative Law
2018
HIGH COURT
GHANA
CORAM
AI Generated Summary
The court dismissed the appellant's appeal, agreeing with the respondent's treatment of royalty payments and trade discounts. The court held that the Distribution License Agreement between the appellant and Beiersdorf AG was a technology transfer agreement requiring registration with the Ghana Investment Promotion Centre. Consequently, the respondent was correct in treating the royalty payments as part of the appellant's profits for tax purposes. The court also upheld the respondent's imposition of withholding taxes on reimbursements paid to distributors and determined that trade discounts must reflect on VAT invoices to be valid. The court emphasized the requirement to pay a portion of the assessed tax before an appeal can be entertained.
JUDGMENT
This appeal stems from an audit undertaken by the respondent herein into the tax returns of the appellant herein for the accounting period of 2014, 2015 and 2016. After the said audit exercise, the respondent assessed the tax liability of the appellant at an amount of GH₵1, 689,149.34 and thereafter, requested the appellant to pay the said tax liability within a period of thirty (30) days.
After notification of the tax liability, the appellant objected to the assessment and after further examination by the respondent, the liability was reviewed to an amount of GH₵1,085,392.36 after the appellant had brought to the notice of the respondent evidence of new tax credit payments claimed and also taking into consideration the payment of an amount of GH₵506,744.80 after notification of the tax liability. The Notice of Appeal, which was filed on the 8th January 2018, is brought upon, basically, three main grounds which are that:
The finding of CGRA that royalty payments made by the Appellant to Beiersdorf AG (BDF) pursuant to an agreement between Appellant and BDF for the use of the Nivea brand should not be allowed as a legitimate business cost because of the failure of the Appellant to comply with prior registration of the Royalty Agreement with the Ghana Investment Promotion Center is wrong in law.
The finding of CGRA imposing liabilities with respect to withholding tax is wrong in law.
i. The decision of the CGRA to characterize reimbursements paid to the distributor of Appellant for work done by third party vendors as sales commission paid to the distributors for which a withholding tax of 10% should apply is wrong in law.
ii. The decision of the CGRA to disallow Trade Discount and to treat Trade Discounts offered to the distributors of the Appellant as commission payment which should attract a withholding tax of 10% is wrong in law.
The appellant also attached to the notice of appeal, particulars in support of grounds of appeal together with various exhibits which the appellant seeks to rely upon to prosecute the appeal. After service of the processes filed, the respondent filed a Reply and also attached, thereto, various exhibits it seeks to rely upon. Thereafter, the parties were ordered to file their statements of case.
In respect of the first ground of appeal, the appellant says that its main line of business is the import and distribution of Nivea products from a company based in Germany called BDF whose registered trade mark is Nivea.