Supreme Court Hijack Trial, GRA Confused, ‘Edward Boakye Trust Fund’ Hot
An order by Justice Nene Amegatse ordering the release of $450,000 dollars withheld tax into a ‘Trust fund’ has sparked controversy at the Ghana Revenue Authority (GRA) and likely to resurrect a cold war over the estates of the late Edward Boakye, (known in his life-time as ‘Boakye Mattress)
Top officials of the GRA have been dragged into the debacle over whether or not the controversial ‘Edward Boakye Trust Fund’ is exempted from paying tax on rent received from a commercial trust property following efforts by managers of the ‘Trust’ to portray a clean sheet to enable them access the full amount of a $2.5m rental income paid by Westone Company Ltd.
The dispute involving $2.5m rental income was triggered by a Supreme Court ruling that ordered payment of $450,000, a percentage of the amount as a withholding tax into the account of Edward Osei Boakye Trust Fund established in the name of late business tycoon and owner of once famous Boakye Mattress within 30 days to avoid a garnishee.
Prior to the directive, the issue about the status of the fund and the landed property in question, situated near ‘Opebia’ in Accra was raised before the Judge with reference to whether it was to be classified as a commercial transaction and the need to pay Withholding Tax under provisions of Section 115 of the Income tax Act, 2015 (Act 896).
The Supreme Court had given explicit orders to the defendant company, Westone Ltd owned by Yaw Boakye, son of the deceased Philanthropist and business tycoon to make full payment within the stipulated period in the case brought against him by three of the seven Trustees, Most Rev. Dr. Robert Aboagye Mensah, Most Rev. Dr. Joseph Osei Bonsu, Rt. Rev. Daniel Yinkah Sarfo .
Section 97 of the Income Tax Act, 2015 (Act 896) provides that;
4. The income accruing to or derived by a charitable organization is exempt from tax.
5. Subsection (4) does not apply to the business income of the charitable organization.
According to the law, “On the issue of Value Added Tax (VAT), rental income of a charitable organization arising from rental of commercial property, sections 35 and 37 and exemptions schedule of Value Added Tax, 2013 (Act 870) do not exempt commercial properties from Value Added Tax.”
For now, The Edward Osei Boakye Trust Fund has received the full $2.5 million without paying any tax since the GRA is still unsure what step it should take.
The fight between Yaw Boakye and the Edward Osei Boakye Trust Fund
Business mogul Edward Osei Boakye of Boakye Mattress fame died in 2006 and at the time of his death, the building in contention was uncompleted.
The first court case in relation to the building was filed on October 17, 2008, by the trustees challenging the validity of a letter purportedly written by the executors of the estate of the late businessman, allegedly allowing Yaw Boakye to complete and take over the building.
The trustees lost at the High Court, but won at the Court of Appeal in 2011 after the second-highest court of the land held that per the will and testament of the deceased, the building was supposed to be given to The Edward Osei Boakye Trust Fund, which is managed by the trustees.
The Court of Appeal, therefore, ordered Yaw Boakye to cease all construction work on the property and also vacate it. Aggrieved by the decision of the Court of Appeal, Yaw Boakye filed an appeal at the Supreme Court but while the appeal was pending, the parties decided to settle the matter based on terms of the settlement which was adopted by the Supreme Court as consent judgement in the case involving the parties.
A consent judgement secured between the two feuding parties was allegedly compromised, leading Yaw Boakye, (The aggrieved) to return to the court seeking a redress on the matter, which it claimed looks like arms-twisting and deception.
Yaw Boakye had complain that the consent judgement failed to assign the entire property for which he was required to pay the accumulated rent of $2.5 million dollars and also did not grant him the consent to sub-lease the building he erected on the property to enable him recoup his investment.
Rather than ensuring Yaw Boakye’s concerns are addressed, the case was cartwheeled to the supreme court which has resumed a retrial of the case without any proper appeal procedure, snowballing the parties grievances into hostility that has threatened to open a can of worms.
Managers of Edward Boakye Trust Fund cleverly wrote to the GRA on the 3rd June 2022, seeking approval as a charitable organization to provide justification for the supreme court’s order.
Strangely, the Commissioner General without any due diligence on the status and the operations of the ‘Edward Boakye Trust’ responded with a declaration in favour of the Trust to keep a whooping $450,000 without a whimper.
“Edward Osei Boakye Trust Fund, from the afore-mentioned is exempted from tax on its income from investment such as rental income in this case as well as any withholding tax on the rental payment by an authorized agent”, a letter signed by Rev. Dr? Ammishaddai Owusu-Amoah-the GRA Commissioner reads.
Not satisfied, and to ensure the state is not shortchanged, Patrick A. Sogbodjor on behalf of solicitors of Mr Yaw Boakye, under his instruction, petitioned the Ghana Revenue Authority on July 13th 2022 for clarity on the status of the taxable status of the Trust.
In response, in a letter dated 21st June, 2022, Assistant Commissioner, Domnic Naad acting on directives Commissioner General, Rev. Dr Amisshaddai Owusu-Amoah explained that the withholding tax in respect of the investment income is exempt from the tax indicated under sub-section 4 of section 97 of Act 896.
The defendant in the controversial case, Mr. Yaw Boakye a businessman who is suspicions about how the case which was before the High Court has been rushed to the Supreme Court and orders to pay the full amount is still probing into the trust, and the possibility of shortchanging the state.
This has been fueled by another letter dated 5th July 2022, on the same subject from the GRA, which categorically states that, the taxable status of the Edward Osei Boakye Trust Fund has not been thoroughly investigated, suggesting no proper due diligence was done.
In that letter Commissioner Julie Essiam who signed on behalf of the Commissioner-General stated, “The Commissioner-General has carefully reviewed your letter and would like to provide appropriate response after all facts in connection with the Trust and necessary checks from other institutions on the status of the Trust have been considered. The Commissioner-General would in due course get back to you on the matter as requested.”
This revelation in the wake of the controversy of the Labianca Tax Evasion Case investigated by the Office of the special Prosecutor and the subsequent dismissal of the Commissioner of the Customs Division of the GRA, Colonel Kwadwo Damoah (rtd), is fueling suspicions about possible collision to shortchange the state.
Not withstanding the developments, the Supreme Court panel of 5 Justices, led by Justice Nene Amegatse instructed Westone Ltd to pay the withheld tax into the ‘suspicious Trust’s coffers.
MORE CONTROVERSY
Checks on documents available and correspondence with the Registrar of Companies indicate the Incorporation of the Edward Osei Boakye Trust was as far back as 18th September, 2008, with a mandate to receive and manage properties and share belonging to the late business tycoon in accordance with his will.
However in another letter dated 7th June 2022 in response to an earlier request by the Trustees date 3rd June 2022 for approval as a Charitable Organization, GRA Commissioner General, in reference to section 97 of the Income Tax Act and stated categorically that…
“Given that Edward Osei Boakye Trust Fund is registered as a company limited by guarantee with the aim of promoting activities for the benefit of the public in all intents and purposes qualifies as a Charitable Organization.
Rev. Dr Amisshaddai Owusu-Amoah in his analysis in the response however said the ‘income from the rental property from the WILL constitutes investment income under section 115 of Act 896 and therefore under the section 97(4), is exempt from tax’.
He however noted that, ‘section 97(5) however makes the business income of charity organizations taxable’.
Further more, ….. “On the issue of Value Added Tax (VAT), it must be noted that the rental income of charitable organizations arising from rental and commercial property, sections 35 and 37, and exemption schedule of Value Added Tax, 2013 (Act 870) do not exempt commercial properties from the Value Added Tax”.
The conflicting statement raises questions about what informed the Supreme Courts directive without crosschecking with the GRA risking the loss of a whopping $450,000 in revenue to the state.
It is not clear, what may be influencing the funny development.
Stay tuned for more shocking details……