Rent tax: Revenue bolster, sanitising renting problems

Rental income is the amount received in lieu of renting out or letting out the property. In Ghana there are two rates in the Rent Bill (Act 220,1963), as amended in 2015,2020. An eight per cent tax on residential premises and 15 per cent for commercial and non- residential premises.

Rent income tax must be paid within 30 days after the rent income is received by the landlord; in default to timely pay, the rent tax attracts an interest of 125 per cent of the statutory rate, compounded monthly.

In Ghana, the Ghana Revenue Authority (GRA) sets out the incidence and implements any tax system and the Rent Control Department under the Ministry of Works and Housing is involved in regulating rental controls and acts.

It is the main arbiter between tenants and landlords.

According to the 1963 Act 220, as amended, in 2020, rent is to be paid monthly, but that has been amended to six months in the current Bill.

Thus, with the country faced with a two million housing deficit, those who rent have to device means of ensuring the smooth implementation of the Rent Tax.

A tentative estimate based on 2010 Housing and Property Census gives accruals of about GH¢17 billion per year to GRA from the tax.

Certificate

The rentee pays for the accommodation and the Rent Control will issue the certificate for registration of the landlord, so that his tax can be charged by GRA.

The certificate from Rent Control will be issued at a fee and the tax is sent through the commercial banks and a receipt is given for six months rent paid, so the landlord will pay the eight per cent rent tax or 15 per cent depending on the type of premise.

The Rent Tax will be a way to save over 600,000 government workers, as the agency – rentee – renter, equation will free up resources for those who rent, from prior arrangements of 24 to 36 monthly payments.

Rent

So every tenant can save money and invest in other enterprises, so that after six months they will pay the rent.

In this way, the landlord can also enter into formal arrangements with the commercial banks to get either two or three years rent deposit they previously took from a tenant under the unregulated system.

The benefits to the Housing Ministry and Finance Ministry will be to streamline the rental tax system
and let government free scarce resources to other priority sectors of the economy.

This system will work with the various Metropolitan, Municipal and District Assemblies (MMDAs) in Ghana and also increase their internally generated funds through stamp duty tax and licencing fees on rental housing market in their various localities.

At the end of the day, a regulated Rent Tax would benefit all

The writer is an economist, broadcast journalist.