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Foreign oil companies operating in Ghana�s oil industry have decided to use a portion of their oil as royalties to the state, the Ghana Revenue Authority has said. By law, the oil companies are expected to pay corporate tax, income tax and royalties, among others. However, since the discovery of the oil three years ago, the petroleum companies have been paying their royalties by offering the state a quantity of crude oil. George Blanskon, Commissioner General of GRA, made this known when he was questioned over taxation in the country�s oil industry. Though he did not give the exact quantity of crude oil that the oil companies released to government for the payment of their monthly royalties, he said the crude oil was later sold by the Ghana National Petroleum Corporation (GNPC). �We take the royalties tax in the form of oil. The companies calculate it and give it to us in the form of oil and then the GNPC takes it and sells it.� He revealed that the proceeds from the sale of the crude oil were paid into the state treasury, after which GRA recorded the amount raised for the year. It was also disclosed that the upstream petroleum companies had for the past three years not paid any corporate tax as required by the law to the government of Ghana. Mr Blankson explained that the authority had not collected corporate taxes from the companies since they incurred losses. �Unless their books are recording profits no tax is paid,� he said, stating that the oil companies has five years to offset their cost, which included expenditure incurred during the exploration period. It is reported that the oil companies spend over $200 million on their operations daily. The industry, he noted, required huge investments as the companies had to purchase assets in the form of machinery and technology. The companies had to recover the huge expenditures they had made in their operation from exploration to production. �Not until the companies have exhausted this cost, there is no way we can ask them to pay taxes, so they have the five-year exemption.� The oil companies are required to file returns every quarter but records at the GRA indicate that for the year 2011, three reports were filed for the first, second and third quarters of the year and they all indicate that the companies did not make any income. The report for the last quarter of the year is yet to be filed by the oil companies, but the authorities do not anticipate any significant change. However, GRA Commissioner General added that �if the oil companies start making profit before the end of the five-year tax exemption period, then they will be required to pay income taxes.� He noted that the situation was a temporal one, adding that �we must have the patience to deal with this period that the profits are nil or very small and therefore the company�s income tax is not collected.� The GRA Boss said there are indications that after a certain period the profits can �come in huge amounts.�