Technology Is The Best Bet To Address Tax Revenue Leakages

Dr. Eric Boachie Yiadom, a senior lecturer at the University of Professional Studies, Accra (UPSA), has stated that the most effective way to stop tax revenue leaks is to strategically deploy technology across key industries, particularly the petroleum and mineral value chains.

He made this claim during a public discussion on tax revenue leaks organized by UPSA’s Faculty of Accounting and Finance. He cited Strategic Mobilization Ghana Ltd. (SML) as an example of a practical case study, praising the company’s role in implementing real-time monitoring systems to increase state revenue collection and improve transparency.

“We have historically had discrepancies in the revenue reporting between the lifting volumes and the taxable volumes by National Petroleum Authority (NPA) and Ghana Revenue Authority (GRA), Dr. Yiadom said.

“Before the engagement of SML in May 2020, there was a discrepancy of about 3.2 billion litres. After SML’s engagement, within four months, that figure dropped to 260 million litres—a reduction of 91.9 percent,” he stated.

He described the real-time surveillance and reconciliation tools implemented by SML as equivalent to placing a “second eye” on petroleum flows, comparing it to the functions of an internal auditor in corporate governance.

According to him, SML’s utilization of ultrasonic flow meters, AI-powered monitoring, and automated reconciliation systems gives a second layer of verification to data supplied by the National Petroleum Authority (NPA).

In order to confirm the company’s operations, Dr. Yiadom personally visited SML’s facilities. He also added that the company’s involvement should be evaluated based on its results rather than on conjecture or politically charged stories.

“Some of these reports are based on their primary source to and find out whether there is a claim to support what SML is saying, or there is no claim to support it,” he said.

Additionally, Dr. Yiadom defended SML’s contentious risk-reward payment model, calling it financially responsible for the government, especially in cutting-edge industries where outcomes are easily quantified.

“Risk-reward basis means that the company should bear all the costs. Then, you will only be paid based on your performance. If your performance does not bring any addition, you will get zero, and all the investment will go to zero. The government will not have to pay a dime for the investment made by the company,” he noted.

He maintained that the system encourages private investment in high-risk monitoring infrastructure while safeguarding public monies by tying remuneration to quantifiable results.

Dr. Yiadom praised SML’s recent entry into the solid minerals and upstream petroleum industries, calling them necessary and natural extensions of the company’s work in the downstream petroleum value chain.

During the same session, SML Ghana’s Director of Support Services, Dr. Yaa Serwaa Sarpong, provided an overview of the organization’s upstream monitoring capabilities.

A Review of Ghana’s Value added tax (VAT) System

According to her, the system gives the Ghana Revenue Authority (GRA) and other government organizations real-time information on crude oil production and offtake levels while also replicating the downstream monitoring architecture.

“In real time, Ghana will be able to know exactly what is going on upstream. We know how much petroleum products, how much that has been extracted and sold, and is being taken offshore,” she said.

A further explanation of the upstream system was given by Hamdan Abubakar, Head of Engineering at SML, who said that it will be implemented across Ghana’s three FPSOs and contains production flow meters, tank-level sensors, and offtake meters to record data on each liter of crude extracted, stored, and sold. The system is intended to facilitate reconciliation between production, storage, and export volumes—an area that was previously vulnerable to opacity and under-reporting.

“With this deployment, we are able to tell the quantity of products that have been lifted. Every litre of crude oil that is being produced and stored will be captured.”

In addition to the petroleum sector, SML is developing a technology solution for monitoring solid minerals, particularly gold, from mining sites to refineries. The system uses scanning and AI analytics to assess the purity and composition of gold bars, calculate royalties, and track movement through the value chain.

“We are able to track the gold and, when the gold gets to the refinery and the report gets back, we are able to tell details of the report,” Mr. Abubakar noted. “With our AI system, we are able to calculate the royalties that are supposed to be paid from that gold bar,” he added.

The company’s upcoming ‘SML Gold Nova’ is designed to be operated in partnership with the GRA and the Minerals Commission. It is expected to go live in the coming weeks, pending full onboarding of industry players.

“If there is a way we can make it better, if we can criticise and improve it, let us criticise and rescue our nation, rather than criticize and destroy it,” he said, Dr. Yiadom ended.

Credit: The Business & Financial Times