A Senior Partner at accounting and advisory firm, PwC, Abeiku Gyan-Quansah, has re-emphasised the call for the government to simplify the country’s tax laws to reduce tax evasion and improve compliance.
Speaking on Daily Graphic’s “Time with PwC last Monday, the tax expert said many Ghanaians failed to pay taxes not necessarily out of defiance, but because they did not understand the tax laws or see the value of their contributions.
He said while tax was a crucial source of funding for public goods and services such as roads, hospitals and education, its complexity often alienated the average taxpayer.
“If the people are saying they do not understand, it is government’s role to introduce laws that are easier to understand,” he stated.
Mr Gyan-Quansah, who has nearly two decades of experience in tax advisory and compliance, also highlighted the need for public accountability and stronger political will to enforce tax laws.
He argued that demonstrating the value of taxpayers’ money and ensuring fair enforcement would boost voluntary compliance and narrow the country’s tax gap.
Time with PwC is a weekly tax compliance advocacy by the accounting and advisory firm in collaboration with the Daily Graphic and its sister paper, Graphic Business.
The content, which would be aired on the Graphic YouTube channel, is meant to break down the tax system to enable individuals and corporate entities to understand the space with an eventual aim of increasing tax compliance and performance.
Context
The tax practitioner warned, however, that oversimplifying tax laws could lead to exploitation.
“I'm an advocate for simplifying the tax laws.
However, there's a level beyond which you can always simplify something.
If you simplify it too much and if you're not careful, people will take advantage of those simplifications and also not comply.
They'll find a way of going round the law because it is so simple to go round,” he said.
Value for money
Mr Gyan-Quansah also emphasised the importance of showing the public the tangible benefits of taxes, particularly Value Added Tax (VAT), in order to boost confidence and compliance.
He argued that many people questioned what their taxes were being used for, which undermined their willingness to pay.
To address this, the PwC Senior Partner proposed that government projects funded by VAT, such as infrastructure improvements like bridges, should be clearly marked with labels indicating they were financed through VAT contributions.
That would help the public to see the direct value of their taxes to minimise excuses for non-compliance, saying; “If the people believe that the money they have paid is commensurate with the value that they are getting, that excuse not to comply will be minimised.”
Political will
Mr Gyan-Quansah mentioned the importance of political will in tax enforcement when discussing the challenges of strict implementation.
He acknowledged that while some people were reluctant to comply with tax laws due to confusion or scepticism about the value of their contributions, a key issue was the political will to enforce tax compliance.
He said politicians may be hesitant to enforce taxes strictly, especially if such actions might negatively impact their political standing.
“Let me pick a typical foreign-led company.
If that company does not comply with taxes, I bet you the likelihood is that the revenue authority would go after them.
Can we say the same about our public markets?
The people say we wouldn't comply.
How easily can you touch them?
And when you touch them, at what political cost does it come?” he questioned.
Mr Gyan-Quansah, therefore, suggested that effective tax enforcement required overcoming these political considerations, ensuring that both authorities and citizens are motivated to comply with the tax laws.
Different taxes
The Senior Partner explained the difference between personal income tax, which was paid by individual workers, and corporate income tax, which was paid by legal entities created by law.
He emphasised that individuals paid personal income tax, while companies, although not human, are treated as “persons” under the law and thus pay corporate income tax.
He clarified that partnerships differed from companies, as the partnership itself may not pay tax directly; rather, the income was allocated to partners who then paid personal income tax.
Withholding tax
Mr Gyan-Quansah clarified the country’s withholding tax regime, stating that it consisted of two key categories: income tax and VAT withholding.
He explained that Pay As You Earn (PAYE), which employers deducted from employees’ salaries, was a form of withholding tax.
He explained that withholding taxes also applied to goods, levied at three per cent works at five per cent, and services levied at 7.5 per cent.
Mr Gyan-Quansah emphasised that those taxes were not final, but taxpayers must file annual returns, declare total income and reconcile their taxes.
"If you've underpaid, you top up. If you've overpaid, you write for your money back," he said.
The tax expert also touched on withholding tax on investment returns, such as equity or loan payments, and clarified the concept of income.
Mr Gyan-Quansah outlined how companies paid taxes quarterly, providing projections to the Ghana Revenue Authority (GRA) to guide their tax obligations throughout the year.
Compliance
The PwC Senior Partner distinguished between tax evasion — an illegal act involving fraud — and tax avoidance, which used lawful strategies to reduce tax.
He warned that while avoidance was not criminal, it may incur interest if underpaid.
He further explained how benefits masked as business expenses could be reclassified by the GRA.
He said companies might set different financial year-ends, unlike individuals whose tax year runs from January to December.
Mr Gyan-Quansah highlighted deadlines, stressing that extensions could be requested in writing.
Penalties for delays, he said, included interest at the Bank of Ghana (BoG) rate plus 25 per cent.
He, therefore, stressed the need for proper bookkeeping, warning that poor records may trigger disadvantageous GRA estimates.
