The decision is Beiersdorf Ghana Limited v The Commissioner General Ghana Revenue Authority Accra. The issue was this: were royalty payments that Beiersdorf Ghana, an authorised importer and distributor of Nivea products, had made to the German company that owns the Nivea brand, Beiersdorf AG, a tax-deductible business expense? The payments had been made in terms of a so-called ‘Distribution Licence Agreement’, one that had not been registered with the Ghana Investment Promotion Center, an entity established by 2013 legislation. The Ghana Revenue Authority had treated these payments as profits.

Beiersdorf Ghana argued that it needed the licence to use the Nivea trade mark, therefore making the royalties a deductible business expense. It further argued that the Distribution Licence Agreement was not a Technology Transfer Agreement as contemplated in the 2013 legislation, which meant that it was not an agreement that required registration. The Ghana Revenue Authority, on the other hand, argued that the agreement was a Technology Transfer Agreement because it dealt with more than the mere use of the trade mark, namely the importation, sale and distribution of the products.

The judge noted that the 2013 legislation clearly requires Technology Transfer Agreements to be registered, and that benefits of registration include the unconditional transferability of dividends and net profits.The judge said that it follows that if an agreement is not registered the company is not guaranteed unconditional transfers.

The legislation defines a Technology Transfer Agreement as one that involves ‘the assignment, sale and licensing of all forms of industrial property, except trade marks, service marks and trade names when they are not part of transfer of technology.’ It can also be one that involves the ‘provision of technical expertise’ or the ‘provision of technological knowledge.’

The judge found it relevant that a clause of the agreement was headed ‘Licence, Transfer of Marketing & Management Know-How and Confidentiality.’ The judge also found it relevant that there was a reference to the use of ‘marketing & management know-how’, and a requirement on Beiersdorf AG to pass on to Beiersdorf Ghana ‘any further experience and knowledge gained over the term of this agreement concerning the distribution of the products.’

The judge concluded that these elements of the agreement meant that it involved provision of technical expertise, and that it was therefore a Technology Transfer Agreement. As a result, the failure to register the agreement meant that the royalty payments had to be treated as taxable profits.

Ideally an appeal court should consider this matter.

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