Akosombo Textiles closed down for non-payment of taxes

The Ghana Revenue Authority (GRA) has closed down two textile manufacturing companies – Akosombo Textiles Limited 9ATL) and Akotex Synthetics Limited – for failing to live up to their tax obligations for the past four years.

The two companies, which are under the same management owe the Value Added Tax (VAT) and Pay As You Earn (PAYE) tax close to GHC 9 million in taxes, penalties and interest since 2009.

While ATL’s indebtedness is GHC 5,714,560.65, ASL would have to cough up GHC 3,187,718.24.

According to the GRA, the two companies had breached all agreements aimed at keeping them in business while they fulfilled their tax obligations.

Acting on a distress order issued by the Commissioner-General of the GRA on November 28, 2012, officials of the GRA arrived on the premises of ATL at Accra Central at 10: 30 am on yesterday to lock up the pleaded for time to contact their bosses at Akosombo.

That was granted, but after almost an hour when the grace period appeared to bear no fruits, the GRA officials took inventory of the assets of the company. Staff of the company packed out office files and bundles of wax prints while the inventory was being taken.

Some employees who could not behold the sight entered their vehicles and drove away, while other bemused ones looked on helplessly. “ATL will rise again and continue to employ more than 1,000 people. Not even the Chinese could prevent that,” one ATL employee said as the red bands of the GRA sealed the company’s office.

Addressing journalists, a Principal Revenue Officer of the GRA, Mr. Wisdom K. Xetor, said ATL had been given enough time to redeem its tax obligations.

“We served it several demand notices to come and make good its liabilities but this did not yield any positive result. So on October 28, 2011, we had to issue a garnishee order on its accounts. The management came and sat down with the GRA management to explain a few challenges that it faced and we gave the company the opportunity to redeem the situation but, as we speak now, it has never paid anything,” he said.

“The purpose of the exercise is to have the liabilities settled. If it fails to do so , then we’ll take possession of its assets to settle the debt,” he stated.

He said another GRA team had been sent to Akosombo to close down the ATL factory there. Ghana’s textile industry has been on its knees for some time now. The industry, faced with threat from unfair competition and unbridled imports, has been struggling to keep up with the competition.

With Christmas just around the corner, the action of the GRA could either push the company to settle its debts or worsen its plight, which could result in the laying off of employees.

Currently, the company employs a little over 1,400 people.

Statistics from the Textiles, Garment and Leather Employees Union (TEGLEU) indicate that the industry used to employ over 25,000 people but now employs only 3,000, with a further reduction expected in the near future.

Mr. Xetor said the GRA acknowledged the challenges the industry was going through, hence its decision to cooperate with the management of the two companies and give them enough time to deal with the situation without resorting to the present action, but they failed to keep their word.

According to him, GRA records indicated that ATL was in business, as it filed its VAT returns, which meant “the company was selling its products. So it doesn’t have any excuse.”

To business community, he said, “We are sending a signal to whole business community that those who find themselves in similar situations should quickly come and settle their liabilities because this is the last of the tools that we use to mobilize revenue and we don’t want to get to this point.”

He said the GRA even preferred that businesses should be self-compliance without the authority having to take draconian actions, but if they failed, the law would take its course.

The Graphic Business of August 29, 2011 reported that a study conducted by an economic research fellow, Dr. Peter Quartey, in 2005 revealed that the market share of local textile manufacturers had decreased over the years to only 30 percent, with pirated, smuggled and under- invoiced textiles enjoying 70 percent market shares.

Source: Daily Graphic