The Anti-Tax Avoidance Legislation and the Operations of Multinational Companies in Ghana: The Way Forward for the Multinational Companies

Abstract

Many companies seek to minimise their tax obligation through tax planning. Tax planning is a combination of tax avoidance and tax compliance used to exploit the ‘loop-holes’ within the tax laws. Multinational companies, in addition to this, exploit differences in tax jurisdictions through transfer pricing, income splitting and thin capitalisation to their advantage. These practice either to, was consider as tax–avoidance in the past but with the passage of new legislation known as anti-tax avoidance legislation in Ghana in 2015. These activities by Multinational companies: tax rebates, reliefs, exemptions and tax holidays prescribed in the tax laws in order to minimise tax liabilities by the multinational companies are still legal. The paper demonstrates that, despite the new legislation, the multinational companies can still minimize their tax liabilities through the difference in tax rates at different tax jurisdictions using intellectual property. The difference between tax avoidance and tax evasion is a thin line and very grey and care must be taken especially with this anti-tax avoidance legislation passed in Ghana. The paper concluded that, the quest by the multinational companies to maximise their profit through minimising their tax liabilities cannot end with the passage of legislation only, but also through compulsion by tax authorities and enhanced audit regulation and audit practices in the country. This is the only way to assist the revenue agencies to maximise revenue else it will amount to nothing.

Keywords: Anti-tax avoidance, avoidance, multinational, tax-planning

JEL Classification: E62