‘New income tax law is to consolidate scattered tax laws’

Mr. George Blankson, the Commissioner-General of the Ghana Revenue Authority, has said the main reason for passing the new income tax law is to revise and consolidate the many scattered tax laws and amendments into one document.

It will also simplify the Act’s provisions and make it more user-friendly to enhance efficiency and facilitate compliance.

“There is a need to open up for scrutiny and clear some misconceptions about the new tax law,” said Mr. Blankson at a stakeholders’ forum that created a platform for tax consultants, tax professionals, accountants, Ministry of Finance and others in the businesses community to deliberate on the new law so as to enhance understanding and help clarify some misconceptions about it. 

The agenda for the forum was aimed at ensuring that rough edges are smoothened for effective implementation of the new income tax law.

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 the classification of firms 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. 

Mr. Edward Gyambrah, Deputy Commissioner Policy and Programmes, Domestic Tax Revenue Division, in a presentation on the various aspects of the new income tax law, said Capital Gains Tax is no longer a separate tax on its own. 

He said gains realised on disposal of assets or liabilities are to be included in business or investment income, and taxed at the applicable income tax rate.

Further, Gift Tax is also no longer a separate tax on its own; and gifts received in respect of employment, business and investment are to be included in calculating the gains and profits from employment, business and investment, he said.

Mr. Gyambrah said mortgage interest relief, which previously was available for more than one residential building for individuals, will now be restricted to just one building during the lifetime of that individual.

He said the law also allows deductions for repairs and improvements, while research and development expenses may also be deducted irrespective of whether or not they are of a capital nature -- adding that the Act 896 exempts from tax gains made from the realisation of assets from a merger, amalgamation or reorganisation when there is a continuity of at least 50 percent of the underlying ownership.

He said while in the past a Private Ruling was binding only on the Commissioner General, the new Act makes such rulings binding on the applicant as far as the transaction in respect of which the ruling was given is concerned.

The new Income Tax Act 2015, Act (896), was officially launched in 2015 -- aimed at revising and consolidating the law relating to income tax and simplifying the Act’s provisions.

The Act also makes it more user-friendly, retains provisions that are peculiar to income tax administration, and also enhances efficiency as well as facilitating 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.