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Home » Taxing Revelations: KPMG Report Exposes GH¢13.38m VAT Gap at SML
Politics

Taxing Revelations: KPMG Report Exposes GH¢13.38m VAT Gap at SML

adminBy adminMay 24, 2024

Strategic Mobilization Ghana Limited
Highlighted KPMG’s examination, as directed by President Nana Addo Dankwa Akufo-Addo, into the agreement between the Ghana Revenue Authority (GRA) and Strategic Mobilization Ghana Limited (SML), reveals SML’s omission of GH¢13.38 million in VAT payments.

KPMG’s assessment shows that between September 1, 2020, and April 30, 2021, GRA did not deduct Value Added Tax (VAT) from payments made to SML for eight months, resulting in a total of GH¢13.38 million.

“The GRA’s usual practice of deducting these taxes for payments to SML between June 1, 2020, and August 31, 2023, was not followed,” the report states.

Furthermore, the report notes the company’s name change from Strategic Mobilization Enhancement Limited (SMEL) to SML after the Public Procurement Authority (PPA) rejected the single-source procurement method three times in 2017.

The PPA’s refusal was due to the company’s lack of capability or prior experience in providing services aimed at combating under-declaration, dilution, and diversion of petroleum products—factors contributing to revenue losses in the downstream petroleum sector.

The report reveals that SMEL, established on February 14, 2017, altered its name to SML on November 22, 2017. “SMEL was incorporated on February 14, 2017. GRA made three (3) unsuccessful attempts between June 16 and September 14, 2017, to single-source SMEL for transaction audit services. On November 22, 2017, SMEL changed its name to SML,” page 11 of the KPMG report highlights.

Page 14 of the report notes that in 2018, the Ghana Revenue Authority proceeded to engage SML in contracts without PPA approval.

Subcontractor
On June 1, 2018, SML was designated as a subcontractor to West Blue Ghana Limited, then a GRA service provider, to provide transaction audit services for seven months.

“On January 1, 2019, GRA extended the transaction audit services agreement with SML without PPA approval, renewable monthly, after the expiration of West Blue’s contract and SML’s subcontract agreement on December 31, 2018,” it adds.

As per the KPMG report, the Ghana Revenue Authority entered into six service agreements with SML, employing the single-source method without PPA approval. President Akufo-Addo suspended the contracts following The Fourth Estate investigation and tasked KPMG with conducting an audit and submitting a report.

The agreement between GRA and SML aimed to improve revenue assurance in the downstream petroleum sector, upstream petroleum production, and the minerals and metals resources value chain.

The revenue, in a statement issued on Wednesday, December 20, 2023, affirmed that its board and management adhered to the proper procedures in procuring SML’s services.

On December 23, 2023, the Finance Committee of Parliament recommended suspending all payments under the government’s contract with SML from 2024 pending a parliamentary investigation into the contract.

The committee determined that upon reviewing the contract, it necessitates parliamentary approval under the Financial Management Act, prompting the need to inform GRA about the statutory requirement.

GH¢13.38m KPMG SML Tax VAT
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