Punitive measures to promote self-assessment tax policy

The Ghana Revenue Authority (GRA) has adopted what it describes as punitive measures to drive compliance with its new self-assessment tax policy. 

These measures, according to the authority, are to prevent a possible situation of businesses filing inaccurate tax returns. 

The Deputy Commissioner in charge of Policy and Programmes at the GRA, Mr Edward Gyamerah, said per the revised Income Tax Act, 2015 (Act 896), businesses that underestimate their returns would pay a penalty of 125 per cent of the Bank of Ghana (BOG) discount rate that will also be compounded over time. 

“The new penalty regime says that if you underestimate your tax, you will be required to pay a penalty of 125 per cent of the BOG discount rate. The interest after the working will be about 70 per cent,” he said. 

He was speaking at a breakfast meeting organised by the Graphic Business, the business newspaper of the Graphic Communications Group Limited (GCGL), and Stanbic Bank on the theme. “The new tax law, its implications for the economy and businesses,” in Accra. 

He explained that although the new penalty regime was a little bit punitive, the aim of the GRA was to promote tax compliance and not to unduly punish businesses. 

“The new penalty regime about self assessment is a little bit punitive. As businesses, we expect you to ensure that you file accurate self-assessment returns. From here, you can go back and look at the self-assessment returns that you sent to GRA in the first quarter; look at your performance today and see if there is the need to make any changes then you quickly do that,” he said. 

Mr Gyamerah added that the GRA was subsequently informing businesses to make sure that they submited accurate returns as the new law had given a grace period of about three months, adding that,“GRA is informing you that make sure you submit accurate returns. Every month, every quarter, make sure you look at your financials and effect the necessary changes.”

Self-assessment tax policy

The new tax policy, which took effect last year, made provision for taxpayers to file their tax returns based on anticipated income, a shift from the old system where tax officers visited offices to do their own assessment. 

He explained that the change in the new law has to do with the dates that businesses are supposed to file the self-assessment returns. 

“Under the old law, you were required to file the returns on or before the commencement of your basis period. So for instance, if your basis period starts from 1st January - 31st December, then before you start 2017, for instance, your self assessment for the year 2017 must get to the commissioner-general, before the 1st of January, 2017. This was impractical,” he explained. 

Instead, the new law, he said, had modified the dates to make room for a three month grace period before submitting their returns. 

“With this new law, you can hold on and submit these returns, on or before payment of your first installment. That means you have been given about three months to put your budget together to know how the business is going to fare in the year before you submit the returns,” he said. 

The Minister of Finance, Mr Seth Terkper at the same forum said Government was expanding the “self-assessment” rule to all taxpayers.

This, he said, was to help reduce objections arising from disagreements with the commissioner-generals assessment. 

Tax expert hails decision

A Tax Consultant, Mr Abdallah Ali-Nakyea said the punitive measures to promote compliance with the self-assessment tax policy were a step in the right direction. 

“For me it is good because we all clamour for tax compliance. If you don’t punish the recalcitrant tax payers, then it means you are rewarding them against the compliant ones,” he said at the forum.