‘Speedily enact tax administration bills’

Speedy enactment of draft tax administration bills into law will help rationalise and consolidate tax rules and improve tax administration in the country, Dr. Abdul Baasit Aziz Bamba, lecturer at the Faculty of Law, University of Ghana, has said.

 

The bills will facilitate the process of addressing administrative issues arising from the merger of the three revenue collection agencies, he said.

Dr. Bamba was delivering a paper at a tax forum in Accra under the topic “Harmonising Tax Legislation for Effective Tax Compliance; Recipe for Revenue Mobilisation”.

“Some of the gaps, conflicts and ambiguities identified in the taxation of petroleum are likely to be addressed in the Internal Revenue bill, when it is passed into law.”

He said conflicts, gaps and ambiguities in the tax regime for natural resources create numerous opportunities for under-assessment, tax avoidance and plain corruption. 

He added that there are a number of uncertainties in the legislative framework of the Minerals and Mining Act, 2006 (Act 703).

Section 25 of the Minerals and Mining Act provides that, “A holder of a mining lease, restricted mining lease or small-scale mining licence shall pay royalty that may be prescribed in respect to minerals obtained from its mining operations to the Republic, except that the rate of royalty shall not be more than six percent or less than three percent of the total revenue of minerals obtained by the holder”.

This, Dr. Bamba said, is a sliding-scale with no specific assessment mechanism -- adding that this can be solved by making regulations pursuant to the Act. 

Again, the Mineral Royalties Regulations, 1987 (L.I 1349), which seek to guide the Ghana Revenue Authority in the computation of royalties due the government under the old Minerals and Mining Act, 1986 (PNDCL 153), has not been revised to be in tune with the new Minerals and Mining Act, 2006 (Act 703).

Dr. Bamba indicated that there are no regulations to guide revenue officers in the proper computation and administration of royalties from mining activities.

“This raises substantive structural legal problems in the application of Act 703, and by extension poses a challenge to the general utility of the specific legal regime that exists to establish a connection between tax revenue, natural resources and development.”

He said deficiencies in the tax law create situations for the unfair treatment of taxpayers. “Taxes may be imposed on taxpayers when they have not had adequate notice as to what they are required to pay to enable them accordingly plan their tax affairs.

“Uncertainty in tax rules disables taxpayers from determining their true liability with a fair degree of accuracy. The effect of uncertainty is that taxpayers cannot ascertain how much tax is due or owed by them.

“As a result, taxpayers often are at the mercy of tax administrators, who may exercise discretion in the application of tax rules that are unclear or are filled with gaps and inconsistencies,” he remarked.