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Agyapa royalties: Govt offering cock and bull story on tax haven-Jinapor

A member of the Energy Committee of Parliament, John Jinapor, has described the explanations the government is offering for deciding to incorporate the Agyapa Royalties in a tax haven as a “cock and bull story.”

He said the government had failed to show any cash flows to prove that the transaction, which would include listing on the London Stock market will be a profitable one.

“All they say is that shares will go up. You have the money today for investment in schools and hospitals and prefer that you won’t do that. You will go and give it to a special purpose vehicle to go and do some trading in an anonymous system and then when they make a profit and declare a dividend, then they [will] come and give you a dividend,” he said, furious about the government’s arrangement to trade off 49% of the country’s mineral royalties for a deal worth $1 billion.

READ: Why Should Foreigners Benefit More From Our Gold Than Us? – Ofori-Atta Justifies Agyapa Royalties Deal

The Agyapa SPV

The agreement concerning Agyapa Royalties, a Special Purpose Vehicle (SPV) company was approved on August 14, 2020, by parliament in line with the Minerals Income Investment Fund (MIIF) Act, 2018 (Act 978). This is aimed at using the state firm to secure about $1 billion through prudent management of mineral resources.

But critics have cited a lack of information on the shareholders of the firm and the registration of the company in a tax haven at Jersey in the United Kingdom.

Jersey

The island of Jersey, one of the European tax havens, offers to its residents a 0% corporate tax and low personal income tax rates. In addition to a favourable tax regime, Jersey Island invites investors with a number of other financial benefits, including low social security payments, no stamp duty on equity transactions, and a straightforward method of making tax and social security contributions.

Due to its attractive investment environment, Jersey has become a popular destination for high-net-worth individuals aiming at minimizing their tax liability. Currently, the Island warehouses almost €2 trillion of investors’ wealth.

Policy contradiction 

One of the justifications the government offered for incorporating in UK tax haven was that it would benefit from zero corporate tax.

But the former Deputy Energy Minister did not take kindly to the suggestion saying, “It is interesting that no less a person than the Finance Minister himself holds a press conference and announced to the whole world that in Ghana, when you set up an entity here, you will pay corporate tax, so it is better for the government of Ghana to rather go and establish a company in Jersey Island.”

He insists that the government was preaching virtue and practising vice as it rallied companies locally to pay taxes but not willing to do the same with Agyapa.

“Which policy contradiction is this?  A company owned by the government, you pay corporate tax when you make a profit and so when this company is registered and listed in Ghana, if it makes a profit, it will pay tax to the government of Ghana. [But in this case] the government of Ghana says no it is no proper.

“So we want to list in somebody else’ country and register the company there so we do not pay taxes to the government of Ghana. Is this patriotism?  Is it a rational thing to do? Is it reasonable that the very government which is preaching that it wants taxes to develop this state and coming up with a lot of legislations to rake in more revenue has decided that a company owned by the government will pay tax so it will rather go to another country?

He said listing on the stock exchange was not the core business of Agyapa asking “what is the core business of Agyapa royalties? Are they going to mine for gold?  Are they going buy gold?”

He insisted that an SPV is usually set to execute a specific task after that job, it ceases to exist.

“There is a lot of opacity on the part of the government,” he said in an interview with JOY NEWS monitored by theghanareport.com.

Agyapa investments

While the government insists that returns on Agyapa’s investments would be invested in health and infrastructural development, Mr Jinapor said the claim was deceptive.

“How do you pay your shareholders by investing in schools and health facilities? You see the deception? Social interventions like schools and hospitals, where do you make that profit to declare dividend? Why would investors around the world invest in a SPV which job is to do what the government of Ghana does?”

He insists that the mandate of Agyapa was not to build hospital and schools, adding that the explanations being espoused by the government was at best an ‘Ananse’ story.

“This Ministry under this government is extremely deceptive. They don’t want to tell you the truth that they are borrowing money and they will pay that debt with our mineral royalties. They think they are so clever and they will dribble all of us.

He insists that the government had indemnified Agyapa to the extent that when the country loses the more 75% of its mineral royalties at its disposal, it could walk free when things go wrong.

He emphasised the opposition party’s position that should they win the December 7 elections, they will not honour the agreement.

 

 

2 Comments
  1. Anonymous says

    Smart MP

  2. Kwadwo Agyeman Prempeh says

    It is pathetic that we have sold ourselves to a cabal of thieves headed by President Akufo-Addo and his family members in government. They have succeeded in stealing our money through this Agyapa Royalties agreement and they have not finished with us yet.
    In 2018 President Akufo-Addo took 30% of Ghana’s shares and added it to that of AGM Petroleum a Belgian company, increasing their shares to 82% from the previous 52%. President is not serving the interest of Ghana and Ghanaians. He is serving his personal privsmate interests through collaboration with foreign companies.
    Sack this thief on 7th December this year.

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