"Ghana is losing mineral revenue through profit shifting, tax avoidance"– Dr. Said Boakye

Ghana risks losing substantial revenue from its mineral resources as multinational mining companies exploit financing arrangements, interest deductions and accounting practices to reduce their taxable profits, Dr. Said Boakye, Executive Director of the Institute of Fiscal Studies, has warned.

Dr. Boakye questioned the extent to which the country benefits financially from its mineral wealth, arguing that some foreign companies operating in the extractive sector structure their investments as loans rather than equity capital.

According to him, such arrangements allow companies to charge interest on borrowed funds and subsequently treat the payments as deductible business expenses, reducing the profits declared for taxation in Ghana.

He explained that although foreign investors bring capital into the country to undertake mining operations and extract natural resources, some structure their financing in ways that enable them to claim substantial interest expenses against their local earnings.

Dr. Boakye also expressed concern about the reliability of corporate financial statements, arguing that government authorities often depend on company-prepared accounts to determine taxable profits without necessarily having sufficient insight into the full operations of the businesses.

He noted that companies could report profits that do not adequately reflect the actual economic value generated from their operations, potentially depriving the government of the revenue needed to finance national development.

He stressed the need for stronger scrutiny of corporate accounts and greater oversight of the financial arrangements of companies operating in Ghana's extractive industry.

The concerns come amid broader questions about Ghana's ability to maximise revenue from its natural resources while meeting competing public expenditure demands, including public-sector compensation.

Dr. Boakye's observations highlight the importance of strengthening tax administration, improving transparency in mining-sector operations and ensuring that multinational companies contribute fairly to the country's revenue mobilisation efforts.

For Ghana, the challenge is not simply attracting foreign investment but ensuring that the wealth generated from its natural resources translates into meaningful fiscal benefits for the country and its citizens.

Story by: Joshua Kwabena Smith and Priscilla Dodoo