Issue practice notes to clarify portions of tax law: Ali-Nakyea urges GRA
A tax consultant, Mr Abdallah Ali-Nakyea, has called on the Ghana Revenue Authority (GRA) and the Ministry of Finance to quickly come up with practice notes to clarify some aspects of the Income Tax Act, 2015 (Act 896) to remove ambiguities.
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He said the law gave some quasi-judicial powers to the Commissioner-General to make some determinations and that there were some items provided without clear definitions which would require practice notes or have to be captured in the regulation to follow to make them clearer.
Addressing members of the Ghanaian-German Economic Association (GGEA) at their monthly Executive Business Forum in Accra, the tax expert and lawyer cited Section 88 of the law, which addresses debt claim in a banking business, where debt claim (provision) would be allowable as a deduction on when the Commissioner-General is satisfied it is a bad debt.
“It appears from the reading of section 88(1) that the Commissioner-General has been given a discretionary power in determining what constitutes allowable deduction for specific provision for a debt claim. The Commissioner-General not being a Justice or other judicial officer requires a regulation (or practice note) to effectively implement the provisions of section 88 of Act 896 in order to comply with Article 296 of the 1992 Constitution of Ghana,” Mr Ali-Nakyea, who is the Managing Consultant at Ali-Nakyea and Associates, stated.
Another area that requires practice notes is the definition of “a public nature” which is one of the ingredients used in determining what could be classified as a charitable organisation for the purchases of tax exemptions.
Here again, Act 896 gives the Commissioner-General the authority to approve an entity as a charitable organisation, based on certain factors, including whether the charitable or religious institution has a public nature. However, ‘public nature’ has not been defined.
Mr Ali-Nakyea, however, stated that for areas where the Commissioner-General had been given discretionary powers to make determinations or ruling, a taxpayer could challenge same in a court of law, since the Commissioner-General was not the final arbiter in tax matters.
Employment of graduates
The law also provides incentives for companies which employ fresh graduates from recognised institutions in Ghana. Such companies would be allowed a deduction from their income for a year of assessment.
Companies which employ fresh graduates could deduct up to 10 per cent, 30 per cent or 50 per cent more of salaries and wages as an expense before taxes are determined, depending on whether their fresh graduates are between one per cent or more of the total workforce of the company.
He encouraged businesses to avail themselves of the provision so that they could make some savings.
Self-assessment
Mr Ali-Nakyea pointed out the new privilege for taxpayers to do self-assessment, with the due date for filing self-assessed taxes being modified to March 31, for the first tax instalment for a year.
He, however, stressed that the penalty for failure to pay tax on due date under self-assessment was more punitive than it existed under Act 592.
President of GGEA
The President of GGEA, Mr Stephen Antwi, said the Income Tax Law had sent shock waves across segments of the economy as many businesses and individuals were surprised about some harsh provisions which added to the burden of the already overtaxed formal sector.
“The Ghanaian German Economic Association is concerned about how this new law would affect our members and the general business community. It is in this context that we dedicated this month’s business forum to the discussion of the income tax and the sensitisation of the participants to its impact on their financial operations,” Mr Antwi stated.