GRA warns businesses against evading withholding tax

The Ghana Revenue Authority (GRA) has warned businesses evading payment of withholding tax to urgently comply as it is an infringement of the country’s tax laws.

According to the Authority a tax audit has revealed that medium taxpaying companies are constantly defaulting payment of withholding tax, and this is a serious offence that is against the tax laws. 

“Almost every audit that we’ve done shows that the majority of companies are defaulting with the payment of withholding tax, and we are warning them to try as much as possible to comply and truly improve. 

“Anybody who evades taxes has broken the tax law like any other law, and the person will be dealt with accordingly; but it is not the desire of the GRA to have people breaking laws and just paying penalties. Voluntary compliance is the cheapest thing that can happen to any tax or revenue authority,” Mrs. Iris Botchway, Assistant Commissioner, Legon Medium Taxpayer Office, told B&FT in an interview.

She was speaking at a one-day tax education programme organised by the Domestic Tax Revenue Division of the GRA at Legon in Accra. It is aimed at educating medium taxpayers within Legon and its environs to help meet their peculiar tax challenges.  

Among other topics discussed were the Internal Revenue Act 592 as amended, Value Added Tax, filing of tax returns, rent tax, rights and obligations of taxpayers, record-keeping, and obligations of taxpayers.

With the withholding tax, the law requires a person effecting payment to another person to deduct the exact tax at source and pay it to the Commissioner. A return, or all details concerning the payment, is also to be submitted. 

The tax withheld by the “withholding agent” is to be paid within 15 days after the end of the month in which the tax was withheld; and on failure to withhold tax, the withholding agent will be personally liable to pay the Commissioner the amount of tax that has not been withheld. 

Mrs. Botchway explained that withholding taxes which have people and companies as agents collect the taxes in trust: “If for the first three months you do not pay it attract a penalty of 10% and after three months it attracts 20%, and these are some of the laws we have.

“With the company income tax, if a business does not submit by the due date it is given a four-cedi penalty charge per day -- and for a business in this economy every pesewa counts.”

The GRA, at a media interaction in Accra, said management is devising strategies to increase revenue mobilisation so as to exceed this year’s revenue target, and it will focus attention on chasing recalcitrant taxpayers.

This has necessitated the establishment of a 40-member Special Taskforce for Revenue Mobilisation with the core responsibility of enforcing tax payment compliance with all tax obligations.  

The Special Taskforce, which will be working in partnership with the Compliance, Enforcement and Debt Management Unit of the Authority, will enable the GRA to attain its goal of generating enough revenue for the state and also find ways of dealing with debtor’s recalcitrant taxpayers who have long been on the Authority’s books. 

Mr. Martian Yamborigya, an official at Legon Medium Taxpayer Office, making a presentation urged participants to ensure proper record-keeping, fill their tax returns on time, and ensure voluntary tax compliance to avoid payment of penalties -- adding that taxpayers must endeavour to provide verifiable books or records. 

He said it is important that people going into business make efforts to learn about the taxation laws related to their operations. 

He indicated that for the optimal revenue mobilisation to be achieved, all taxpayers must contribute their quota.

“As the institution tasked to mobilise revenue for national development, GRA is poised to use all legitimate means to collect taxes from both existing and potential taxpayers,” he remarked.