Systems required to track income of businesses - Tax consultant

A Tax Consultant, Mr Abdallah Ali Nakyea, has said the government must put in systems to enable it track income of businesses as it seeks to broaden the tax base. 

He said although the widening of the tax base would rake in more revenue for government, which was good for the economy, it behoved the government to design systems to truly track everybody’s income. 

He recalled that formerly, resident persons were taxed on source jurisdiction (one’s income must have a source in Ghana before he or she pays tax), implying that persons who earned income outside Ghana and did not bring it here were not liable to tax. 

In an interview with the GRAPHIC BUSINESS after a tax forum in Accra, he said “if you do it that way, it means that the person is here using all our facilities, light, water, driving on our roads and doesn’t contribute but he can be remitting that money and spending. Although the laws under the old system said if you transfer money from outside to acquire a property, pay a debt or you buy something and bring it in you are taxable, that is not what is done.” 

“He comes here and then does the transfer, buys something and pays from that foreign account yet we are not getting the tax. So with the worldwide income now you are subject to tax wherever your income is,” he said. 

The tax forum was organised by the GRAPHIC BUSINESS and Stanbic Bank on the theme: “The new Tax Law and its implications for the economy and businesses.” 

Ghana’s capacity

According to him, Ghana was a signatory to the Multilateral Exchange of Information Agreement (MEIA), which made it possible for it to track taxable income from any country. 

“So what they need to know is if they can identify you and know you have an income in the United Kingdom (UK) to contact the revenue agency in the UK for us to know the details and for them to take the tax for us and vice versa for a British citizen here earning income. And that’s the essence of the multilateral exchange,” he said.   

He added that if citizens were now subject to tax on income wherever then the tax base could be broadened unlike formerly when the tax was only on what was brought into the country.

He explained that Ghana had good laws but implementation had always been a challenge, stressing that “Our problem is we always have very good laws but the implementation, monitoring, enforcement, compliance that is what we need to work on because other countries are benefiting from it they would always track wherever your income is and these are the systems we need to design,” he said.