Exporters bemoan challenges with duty draw back scheme
The administration of duty drawback, an inventive for boosting exports, continues to be a challenge that threatens the survival of businesses in export trade.
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For instance, only a third of companies which applied for the facility received their refund, according to a study conducted by the Ghana National Chamber of Commerce (GNCC),
This leaves majority of applicants (about 70 per cent) still having their funds locked up with the government, a condition which starves them of liquidity.
Duty drawback is the refund of import duties and taxes paid on imported materials that are used as inputs in the manufacture of goods which are then exported.
Speaking to the GRAPHIC BUSINESS on the sidelines of a sensitisation workshop in Accra, the Chief Executive Officer (CEO) of the GNCC, Mr Mark Badu-Aboagye, said although the escrow account used in managing the refund had been increased from four per cent to six per cent of total duties collected, businesses were still owed quite a large sum of money in the form of duty drawbacks.
According to a study funded by the Business Sector Advocacy Business Challenge Fund (BUSAC), the government owed an average of GH¢456,289 per company. The highest amount owed to a business is about GH¢1.7 million while the minimum amount is GH¢500.
The study was aimed at evaluating the operational bottlenecks that had bedeviled the implementation of the duty drawback framework based on which the GNCC is expected to carry out an intense advocacy to reduce the hiccups and cumbersome duty drawback regime for exporters and manufacturers.
The Greater Accra Regional Chairman of the chamber, Mr Frederick Alipui, urged the government to take a holistic view of the policies, laws and regulations needed to create a mutually reinforcing framework that fostered competitiveness and a business friendly environment.
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He encouraged the Ghana Revenue Authority (GRA) to continue efforts to modernise and make electronic data entry obligatory.
"The Ministry of Finance as a supervisory authority must also ensure compliance of the procedures with timely refund of the duty drawback to traders," he added.
He further entreated the regulators to create a window for the processing of relevant customs forms required for making applications electronically.
"In addition, GRA should simplify the documentary requirements to ensure rapid disbursement of funds for payment of claims," he said.
Findings of the study
The study revealed that a large number of exporters who have applied for the duty drawback over the past two years had not received a full refund.
The payment of drawback refunds could take about 10 months depending on follow-ups, the study found. In extreme cases, payment of refund could be made after two years, while the shortest possible period for refund is five months.
Another key concern the study highlighted was that most of the manufacturers and business owners did not have prior knowledge about the laws and regulations governing the duty drawback regime.
"For instance, they do not know which of the imported goods would be processed as re-exports and on which drawback could be claimed," it stated.
Another major challenge hampering the effective implementation of the duty drawback scheme is the insufficient funds in the escrow account to settle drawbacks. — GB