The Perseus case: a new blow for foreign companies?

Last week, the Accra High Court dismissed an appeal by the Australian mining company Perseus Ghana Limited, which for the past few years had been fighting audits conducted between 2013 and 2019 by the Ghana Revenue Authority. This is one of the first times that a foreign company in the mining sector has gone to court against the Ghana Revenue Authority. Although Perseus' appeal was rejected, this case may set a real precedent as voices are increasingly raising against the GRA.

A long-standing legal dispute

In Ghana, governmental relations have been under strain since the GRA conducted a first tax audit of Perseus Ghana Limited's activities in 2013. This initial assessment resulted in a claim to pay a 6.3 million dollars fine. Perseus immediately filed a first legal objection in 2014. After numerous unsuccessful negotiations, and despite the payment of almost 2.5 million dollars from Perseus Ghana Limited, the GRA revised the tax debt to 10.2 million dollars after a second audit in 2019. A very surprising decision according to various external analysts, as Perseus is used to maintain trustworthy relations with local authorities, especially in Côte d’Ivoire.

The GRA or practices to be improved

In order to replenish the state's finances, the GRA, the tax arm of the Ministry of Finance, has for many years been conducting audits on the main foreign extractive companies operating in the country. Extractive companies are the first to be targeted, even though their activities contribute to 9% of the national GDP. Given the difficulties of a post-Covid recovery, is the executive opting for a sophisticated system of audit blackmail as an additional lever in its fiscal arsenal?

A brake on investments?

This practice is likely to get worse, as the GRA recently announced its intention to increase audits of the mining sector in 2022. In a context where the state is more than ever in search of funds, this initiative is questionable in its scope: what legitimacy and reliability can these audits claim in the absence of consultation with the main stakeholders? Consequently, while these new measures will certainly raise substantial funds in the coming months, they could also largely discourage investors already chilled by deteriorating indicators on the business environment and corruption.

A case to be followed…

The representatives of Perseus Ghana Limited have not yet communicated, although a new legal recourse could be filed by the company in the coming days.