COCA-COLA EQUATORIAL AFRICA LIMITED vs THE COMMISIONER GENERAL
December 10, 2022
HIGH COURT
GHANA
CORAM
- HER LADYSHIP, JANE HARRIET AKWELEY QUAYE (MRS.),
Areas of Law
- Tax Law
- Evidence Law
- Civil Procedure
December 10, 2022
HIGH COURT
GHANA
CORAM
AI Generated Summary
This High Court tax appeal by Coca-Cola Equatorial Africa Limited against the Commissioner-General of the Ghana Revenue Authority challenges multiple assessments arising from a 2016–2018 audit. The dispute covers withholding tax on payments related to a Voltic trademark, withholding on accrued transactions said to be reversed, withholding applied to reimbursed salaries paid to an employment agency, the recharacterization of year-end discounts as commissions (and a second 15% withholding on a ‘Voltic incentive’), and the imposition of VAT, NHIL and GETFund on services supplied to The Coca-Cola Export Corporation. The Court held that payments to Voltic International constituted royalties subject to withholding and that claimed reversals were unproven; but it set aside withholding on reimbursed salaries, rejected the 15% assessment on the ‘Voltic incentive’, and ruled that the marketing services were consumed outside Ghana and thus zero-rated. It ordered annulment of the GHS 33,143,375.16 assessment and a revised audit, with refunds within 90 days.
A notice of appeal against the final objection decision of a tax assessment was filed in the Registry of this Court on 18th November, 2021 by Coca-Cola Equatorial Africa Limited (hereinafter referred to as the Appellant) against the Commissioner General of the Ghana Revenue Authority (hereinafter referred to as the Respondent), on the following grounds: -
i. The Respondent erred in Law by imposing Withholding Tax on the purchase of trademark by the Appellant from Voltic International Inc., a company registered in the British Virgin Islands.
ii. The Respondent erred in Law by imposing Withholding Tax on accrued transactions which were subsequently reversed for non-performance and therefore not invoiced for payment.
iii. The Respondent erred in Law by imposing Withholding Tax on expenses of staff salaries reimbursed to an employment agency when the requisite PAYE taxes had already been withheld by the employment agency and paid over to the Respondent pursuant to Section 114 of the Income Tax Act, 2015 (Act 896).
iv. The Respondent erred in Law by wrongly construing trade discount which had accrued in 2017 year of assessment as a commission and subjecting it to a Withholding Tax of 10%, purportedly pursuant to Section 116(1)(a)(v) of the Income Tax Act, 2015 (Act 896).
v. The Respondent erred in Law by imposing a Withholding Tax of 15% on the same accrued trade discount subsequently made available to the Appellant’s customer in the 2018 year of assessment.
vi. The Respondent erred in Law by imposing Value Added Tax (VAT), National Health Insurance Levy (NHIL) and Ghana Education Trust Fund Levy (GETFundL) on a supply of services by the Appellant, which was consumed outside the country, contrary to Item 3(3) of the Second Schedule to the Value Added Tax Act, 2013 (Act 870).
Summary
The Appellant’s primary business is the extraction and sale of water under the Voltic brand owned by the Appellant. It is also engaged in the business of providing marketing and other support services related to The Coca-Cola Company (“TCCC”) and its affiliates and other related administrative activities to The Coca-Cola Export Corporation. The Respondent is the head of the Ghana Revenue Authority (GRA), a statutory body responsible for tax administration and revenue collection in Ghana.
Sometime in December 2019, the Respondent commenced a tax audit into the affairs of the Appellant for the period 2016 to 2018 years of assessment and issued a Final Tax Audit Report dated 2