Today on Ghana Rising we are shifting attention from the banking crisis to explore Ghana’s Tax Amnesty Period.
The subject is pertinent because the tax Amnesty period which started December 2017 ends August 31. This implies that defaulters have barely a week to meet the deadline. Remember this deadline applies to filing, so if you get to the Ghana Revenue Authority’s offices on or before the date, you are covered.
What you should know
Tax amnesty is a time-bound window which allows tax defaulters to come forward and declare their status, pay a defined amount, be forgiven some charges and penalties and stay free of prosecution. Essentially granting a reprieve to tax defaulters, and seeking to widen the income tax net to improve revenue inflows.
The present Tax Amnesty Act was passed by parliament in December 2017. The GRA explains that this is not the first time Ghana is granting tax amnesty to tax defaulters. It had previously been done in 2006 for six months and October 2012 when Parliament passed the Internal Revenue Tax Amnesty Bill, 2011, granting reliefs to tax defaulters, and seeking to widen the income tax net and directly improve Ghana’s revenue inflows.
This is an opportunity that has been given to taxpayers and potentials who have failed to honour their tax obligations. Within the stated time frame, Ghanaians who have failed to
- Register with Ghana Revenue Authority,
- File tax returns by due dates,
- Pay taxes on due date,
- Make full disclosure of financial reporting,
can self-correct without fear of persecution.
The focus is on defaulters within the period between 2014 and 2017.
This implies that taxpayers who from 2014 are not current in their submission and payments or have not previously registered will have to take advantage of this period.
Businesses that are non-compliant are also advised to take advantage of the period.
Why Tax Amnesty period?
Several governments have been faced with domestic revenue mobilization challenges.
This government after assuming office and abolishing what it termed nuisance taxes has been faced with the steep task of growing domestic revenue mobilization to finance increasing government expenditure and fund key projects.
One of the measures being explored by the Ghana Revenue Authority to close the gap is the Tax Amnesty period.
The introduction of tax amnesty is expected to get taxpayers to come forward willingly to honour their obligations.
It is also aimed at boosting revenue collection and easing the affairs of persons and businesses who have defaulted.
The voluntary declaration is also expected to lessen the cost of collection on the GRA.
There is an expected outcome of widening a desperately lean tax net.
How can defaulters regularize?
Go to the nearest Ghana Revenue Authority office, request Tax Amnesty forms, fill out the forms and submit to an officer.
You may also download tax amnesty forms from the GRA website, fill out and submit to GRA offices.
The Authority has a paperwork period of 30 days after which they will get back to you.
If you are unable to pay your arrears in full, feel free to negotiate an extension of time or negotiate the sums you owe.
If you are a taxpayer who has already registered but has outstanding arrears, this is for you. You know the arrears you owe; full disclosure is expected on the form provided.
Potential tax payers who are not registered but have earned income and profit in the years stated also have to register with the authority and submit all outstanding returns for the period.
What is the advantage if you declare your status?
Is simple, you will not be required to pay penalties and interests accrued over time.
You escape prosecution.
What are the Penalties of non-compliance?
After this tax amnesty period expires, GRA offices nation-wide will collate a database of defaulters.
If you are a Government employee, it’s much easier to track your tax compliance, this logically implies that defaulters within the public sector will be first on the GRA’s radar.
Efforts will be made to track defaulters within the informal sector and various tax penalties will apply based on your offense. The penalties differ based on the nature of infraction which could be late submission, non-submission, falsifying accounts and/or under declaration.
If a defaulter is found to be in arrears before the period 2014, defaulter will be liable to pay penalties accrued before the period as well as taxes and penalties accrued after.
In extreme cases, jail term will be applied.
What is the government’s expected Revenue?
For 2018’s Tax Amnesty programme, the Ghana Revenue Authority has estimated revenue mobilization between GH¢300 million and GH¢500 million. Total tax revenue target for this year stands at GH¢39.8 billion.
Although previous Tax Amnesty periods did not meet expected revenue targets in Ghana, the authority believes the promise of avoidance of criminal suits will yield positive results.
What has happened internationally?
Tax remissions have been adopted by several countries in efforts to give a new start to defaulters and widen tax nets.
Most countries have turned to it as a last resort in attempts to increase revenue mobilization. Usually following the same pattern of eliminating criminal prosecution and large back tax bills and offering lower rates on previously undeclared assets.
One such example is Indonesia whose government rolled out a massive tax amnesty initiative in 2016. The programme was hugely successful raking in several trillion Rupiahs on hidden assets and income declared during the period. Declarations included offshore assets and properties.
The Jakarta post profiles other country examples as Argentina, Fiji, Gibraltar, Honduras, Pakistan, South Korea, Trinidad & Tobago and Thailand, as well as Brazil, India, Israel, Malaysia, and Russia. The last five countries are currently conducting an offshore voluntary disclosure program (OVDP), which is only focused on asset disclosures, without repatriation.
How can Ghana rise out of Revenue Mobilization Challenges?
The rewards of enhanced compliance and tax enforcement are very important for economic growth. Ghana’s ability to increase domestic revenue mobilization will give her a rare opportunity to control her destiny by reducing reliance on foreign assistance and directly paying for needed development services like free Senior High School, health insurance, and good roads. And in a time when Ghana has gained international attention by touting a Ghana beyond Aid, it is all the more pressing to secure domestic figures.
It will make available revenue for development, fund infrastructure and put the nation at par with the best practices in revenue collection.
The result is an increased investment as a result of higher foreign inflows.
The present inability of Ghana to identify a great number of tax payers has put a strain on the faithful few.
It is important for Ghana as a matter of urgency to develop a reliable national identification system which will identify Ghanaians in informal engagements. The national identification programme and the Ghana Post GPS are attempts that have been made to solve the challenges in identifying the informal tax payer.
Results have however been abysmal. It is necessary to return to the blackboard and formulate solutions to the challenges these initiatives have encountered.
The inability to fix the identification system will keep the tax net lean and unreliable. And make most efforts at persecution impossible. How do you persecute a defaulter you cannot identify?
Ghana must fix leakages in tax collection processes and address corruption especially that which is enabled by tax officers, combat tax avoidance through intelligent monitoring and plug illicit financial flows.
The country must also address a heavily flawed property tax system and according to Professor Godfred Bokpin, “totally overhaul the tax exemption regime”.
To deliver development, it is important for a country to be able to mobilize domestic revenue optimally and allocate those resources prudently.
Development partners will be a great ally in this agenda.
Tax revenue reform must also address political linkages in the system and how they interfere with revenue collection and accountability.
Ghana’s failure to meet domestic revenue mobilization goals means that Ghana is at risk of not meeting the sustainable development goals which are hinged on the ability of countries to effectively grow domestic revenue collection.
By Nuong Faalong|3news.com|Ghana
The author is a broadcast journalist and a writer. If you have questions or concerns, talk to Nuong at nuongg@outlook.com.