Revenue Administration Bill submitted to Cabinet

The Deputy Minister of Finance, Mrs. Mona Quartey, has said the proposed Revenue Administration Bill is in its final draft and will be submitted to Cabinet for onward transmission to Parliament for passage.

“All the common administrative provisions in the previous tax laws have been pooled together into a single legislation. I wish to inform you that the proposed Revenue Administration Bill is in the final draft and will be submitted to Cabinet very soon for onward transmission to Parliament.”

The B&FT has gathered that the Revenue Administrative Bill is expected to be laid in Parliament during 2016. Its passage will focus on measures that will ensure tax compliance and improve revenue administration rather than introduce new taxes.

These measures will include the following: moving all processes to an electronic platform and accelerating the shift to a functional form of administration in all tax offices; review the current thresholds for classification of persons as large, medium or small to reflect current trends; establish joint audit/investigation teams to conduct audits and investigations; intensify the monitoring of Free Zones Enterprises by rolling-out the Integrated Free Zones Unit in line with the 2nd GRA Strategic Plan 2015 -2017. 

The measures will also implement the Electronic Point of Sale project and roll-out fully the excise tax stamp project. 

Mrs. Quartey said this at the official launching of the new Income Tax Act 2015, Act (896) which seeks to revise and consolidate the law relating to income tax and simplify provisions of the Act.

The Act also makes it more user-friendly, retains provisions that are peculiar to income tax administration, and also enhances efficiency and facilitates compliance while broadening the tax base -- removing the narrow and distorted tax base of the Internal Revenue Act 2000 (Act 592); thus rationalising, streamlining and restricting tax concessions in the country.

“A great challenge facing our nation today is the ever-increasing demand for development and the needed revenue to meet such demands.  Government finds such demands legitimate and part of the social contract between citizens and government. Such demands also serve as a constant reminder for government to find avenues of raising revenue,” she said.

She stated that the national governments must have the revenue necessary to fund operations of their various departments, provide infrastructure and services for the population, invest in economic development, and advance various other priorities.

“To be able to raise the required revenue, government must be able to enhance the main mission of tax administration, which is to collect the tax revenue due from taxpayers under the country’s tax laws without hindering private sector development,” she indicated.

The main responsibilities of the tax administration, she explained, is to administer tax laws fairly and impartially and also minimise the cost and burden on taxpayers in complying with their tax obligations.

“ It is in this light that l see the launch as another means of letting our countrymen/women know the law that regulates the payment of tax from their hard-earned income, and of need to honour their tax obligations,” Mrs. Quartey said, adding that the role of taxes in the lives of any nation’s people cannot be over-emphasised. It is largely in this regard that nations and governments attach great importance to taxation, and have tax laws as key parts of their domestic legislation.

Taxation, she explained, is a major fiscal tool in mobilising revenue and directing investment flow -- and has never been popular. One political maxim is that no one likes paying taxes.

“However unpopular, we must also remember that taxation is the price we pay to live in civilised societies. While the tax administrator aims at maximising revenue, the tax payer finds ways and means of paying the minimum tax possible,” she said.

The Commissioner General of the Ghana Revenue Authority, Mr. George Blankson, said the integration of Revenue Agencies in 2010 created a need for the harmonisation of administrative and new tax laws expressing the need to incorporate charging provisions and administrative processes peculiar to the divisions.

Prior to passage of the Ghana Revenue Authority Act, 2009 (Act 791), the three revenue agencies had their respective tax laws made up of the charging provisions and administrative provisions. Some of the administrative provisions were common to the respective tax laws, while other provisions were inconsistent with similar ones in these tax laws.

Income Tax administration in Ghana has seen several challenges over the years. The business environment within which the tax administrator operates has been in a continuous state of flux. Technological, social, economic and cultural factors have had great impacts on the tax administrator over the years. The growing complexities of business organisations and the advancement in technology call for a tax administrator who is abreast with changing trends in society.

For a number of reasons, efficient tax administration is a major problem in developing countries. Not only do developing governments face an uphill battle in bringing individuals and businesses into the taxation process, but there are also challenges arising from insufficient administrative staff, high levels of illiteracy among taxpayers, lack of sufficient equipment and facilities, and lack of reliable statistical data…all negatively affecting revenue mobilisation.

Apart from these challenges confronting developing nations: “Ghana’s problems seem to have been compounded by a direct tax act, the Internal Revenue Act 2000 Act, which was complex and not user-friendly. There is therefore need to replace it with a new Act that takes into consideration international best practice”.

Mr. Blankson said the Income Tax Act, 2015 (Act 896) is therefore part of the process of reorganising the tax laws known as the Tax Law Project, confirming that it reorganises the residual provisions in Act 592; simplifies it and makes it user-friendly, while retaining provisions that are peculiar to income tax administration.

These include provisions which specifically guide the different methods and time for payment: including tax payable by withholding, tax payable by installment and tax payable by assessment to improve/enhance efficiency and facilitate compliance. Added to these was the striking narrow and distorted nature of the tax base in the Internal Revenue Act, 2000 Act 592.

Ralph Tufour, Chairman of the launch, remarked that the GRA has since integration of the revenue agencies strived to improve service delivery, re-engineer its business processes and procedures, and simplify the tax laws to make them user-friendly.

“It is in this light that the Income Tax Act, 2015 (ACT 896) and the other tax acts must be seen. Since 2010, the GRA has through the Tax Laws Project, an initiative in the GRA Strategic Plan, worked closely with government and Parliament to pass the following Acts.

“It is important to remember as Ghanaians that the bottom line for provision of the needed infrastructural and social facilities and the many other numerous requests citizens legitimately make on government is revenue,” he said.

He added that people must therefore strike the needed partnership between our business activities and the tax administration, and accord taxation the required priority.

“It is time to stop the practice of putting our tax affairs on the back burner until we are compelled by circumstances to deal with them. We must appreciate that nothing gets done without revenue,” he remarked.