[2022]DLHC11433 • February 8, 2022 • High Court
PERSEUS MINING GHANA LTD vs. THE COMMISSIONER GENERAL
Perseus Mining Ghana Ltd challenged the Commissioner General's recharacterization of its forward sales contracts (hedging arrangements) on gold prices, which the Commissioner General treated as tax avoidance mechanisms leading to additional tax liability. The Applicant argued that the hedging was prudent given erratic gold prices and that the transactions were ratified and legitimate. The Respondent contended that the hedging prices were fixed by the Applicant's parent company and differed significantly from open market prices, thus reducing taxable income improperly.
read moreFrom my evaluation of the submissions on the appeal, I hold that the Applicant to me, has been unable to show that the prices of gold were so erratic and showed a consistent downward trend to the extent that, it would be prudent to hedge with a lower price than the prevailing market price. This is moreso when gold is not one of the known commodities that has the tendency to fall drastically and for a considerable period. Since the audit revealed a loss of income which cannot be rationalized to make economic sense and for the fact that the Applicant was unable to debunk the assertion of the report that the hedged price was fixed or dictated by or negotiated by the Applicant's parent company which imports the principle of related transactions especially as they differed considerably from what was prevailing on open market as exhibited in Exhibits GRA 4, 4A and 4B which could reasonably be taken as arm's length transactions or prices, I hold the view on that point that the Respondent was...