Business News of Wednesday, 9 December 2015
The Ghana Revenue Authority (GRA) will implement a new income tax law to replace the repealed Internal Revenue Act, (Act 592) with effect from January 2016.
The new tax, Act 896, 2015, which was made known yesterday, is to remove the narrow and distorted tax base of the old Act.
While the new law contains some provisions in the old act, other sections have been modified and new provisions introduced to make its compliance easy for taxpayers.
In the new act, specific provisions that guide the different methods and time for payment, including tax payable by withholding, tax payable by instalment and tax payable by assessment have been spelt out to improve and facilitate tax compliance.
Highlighting sections of the new law, the acting Deputy Commissioner of the Policy and Programme Unit of the Domestic Tax and Revenue Division of the GRA, Mr Edward Gyamerah, said provisions had been made for income tax exemptions.
“As part of the policy to broaden the tax base; interest paid to an individual is excluded from income that are exempted from tax. This is taxed at a concessionary rate of one per cent as a final tax,” he said.
Additionally, he said the interest or dividend paid to a member or holder of an approved unit trust or mutual fund is taxed at one per cent where the holder is an individual.
Pension, he indicated was now included as an exempt income.
He said the act also had provisions for special Industries such as petroleum operations, minerals and mining operations and financial Institutions.
Lottery, he added, had also been considered as an investment under the new law, saying “winnings from lottery attract tax at a rate of five per cent final withholding tax.”
A gain from the realisation of an investment asset, he said, also attracts taxation just as gifts received in respect of the investment.
In a speech read on his behalf to launch the new income tax, the Minister of Finance, Mr Seth Terkper, described the old act as complex and user-unfriendly. Therefore there was the need to replace it with a new act which takes international best practices into consideration.
“The new act has reorganised the residual provisions in Act 592, simplified it and made it user-friendly, while retaining provisions that are peculiar to income tax administration.
Mr Terkper said the advancement of the business environment called for a tax administration that was abreast of the changing trends in society.
In a welcome address, the GRA Commissioner General, Mr George Blankson, noted that vigorous sensitisation programmes would be embarked upon by the authority to ensure that the public appreciated and understood the act.
He explained that the integration of the revenue agencies in 2010 necessitated the harmonisation of common administrative provisions.
“The Income Tax Act is therefore part of the process of the reorganisation of the tax laws known as the tax law projects,” he said.
A Board Member of the GRA, Mr Ralph Tufour, who chaired the function, urged potential and regular income earners to cultivate the habit of honouring their tax obligations.
He stated that government could only build the needed infrastructural and social facilities when sufficient revenue was mobilised.
“It is time to stop the practice of putting tax affairs in the back burner until we are compelled by circumstances to do so. We as a people must accord taxation the required priority,” he said.