In Part 1 of this series, we highlighted the tax administration proposals from the 2020 Budget Statement and Economic Policy, laying the foundation for the tax administration measures introduced in the 2020 calendar year. In order to achieve the initial revenue target, the tax administration policy measures that were introduced included proposals to restructure the tax system and develop a comprehensive revenue policy and strategy, proposals to reform the Ghana Revenue Authority (‘‘GRA’’) for efficiency and productivity, and proposals to pass the Revenue Administration Regulations and the Transfer Pricing Regulations.
In this article, we have highlighted the COVID-19 tax administration policy measures as well as the tax administration measures proposed by the 2020 Mid- Year Fiscal Review.
Tax Administration Measures Arising from Government’s COVID-19 Tax Reliefs
After COVID-19 hit our country, the Government stepped in with a number of tax measures meant to support the economy in these times, as well as relieve the tax burden on taxpayers, amongst others. From a tax administration perspective, the specific tax measures were the extension of due dates for filing tax returns, a remission of penalties on principal debts of taxpayers who redeemed their debts and measures to encourage payment of taxes by bank transfers. These were mentioned in the Minister of Finance’s 30 March 2020 Statement to Parliament on the Economic Impact of the COVID-19 Pandemic on the Economy of Ghana.
Regarding the extension of return filing deadlines, taxpayers were granted a two-month extension
from four months to six months after the end of their reporting period to file their returns. This applied to both personal and company income tax returns. In addition, as a form of amnesty to reduce the burden on taxpayers, taxpayers who settled outstanding tax debts to the GRA before 30 June 2020 were forgiven any imposed penalties on these tax liabilities.
During the period of the partial lockdown and restrictions in movement, taxpayers were also provided with avenues to make payments via bank transfers and to also file their returns electronically, predominantly by email addresses of the respective tax offices located within parts of the country affected by the restrictions in movement directives.
Amid the COVID-19 pandemic and a global economy that had surely felt the impact of the pandemic, the Minister of Finance in accordance with the Public Financial Management Act, 2016 (Act 921) presented the Mid-Year Fiscal Review of the 2020 Budget on 23 July 2020. This Budget Review focused on social intervention policies aimed at helping the economy recover from the impact of the pandemic, with no new taxes introduced.
Regarding tax administration measures, the 2020 Mid-Year Fiscal Review focused on the passage of the Exemptions Bill and the minimisation of revenue leakages through simplified filing, frequent audits and the prosecution of offenders. These are further explained below:
Passage of Exemptions Bill
In the first quarter of 2019, the Exemptions Bill was laid before Parliament. After almost two years, the
Bill is yet to be passed into law. The Bill seeks to consolidate and streamline the applicable exemptions in different laws and improve transparency and certainty in dealing with tax exemptions. It is our hope that our Parliament will give the Exemptions Bill the attention it deserves during such uncertain times.
With several civil society organisations calling for a rationalisation of the numerous tax exemptions given to different stakeholder groups, the Exemptions Bill could not be passed at a better time.
Revenue Leakage Minimisation through Simplified Filing, Frequent Audits and the Prosecution of Offenders
Simplified filing processes
In the 2020 Budget, the Government stated that the GRA will be transformed through three main themes of People, Technology and Service. One of the efficient ways of simplifying the filing process is through the use of technology. In recent years, the GRA has introduced a number of technology-backed innovations such as the Integrated Tax Application and Preparation System App (“ITAPs”) and e-filings to simplify the filing process.
The use of these innovations are however yet to be optimised due to some limitations. The GRA in 2017 hinted on plans to allow taxpayers to pay their taxes through mobile money, but this is yet to be fully rolled out. We expect the GRA to enhance and facilitate the use of some of these technology tools.
Frequent tax audits
Over the last few years, the GRA has conducted several tax audits on companies. These frequent tax audits seem to be focused on the few known taxpayers who have expressed some frustration. While we welcome frequent tax audits, we recommend that the audits are evenly spread out and done diligently. We expect that the newly constituted Tax Audit and Quality Assurance Unit of the GRA will adhere to its mandate of ensuring quality audits and protecting taxpayers from abuse.
Prosecution of offenders
The prosecution policy of the GRA provides guidelines on instances where the Authority will prosecute an offender. In the prosecution policy, the GRA has to consider a number of factors such as cost of prosecution, whether an administrative response will be appropriate, for instance, before deciding to prosecute.
Although the GRA is yet to begin the aggressive prosecution of offenders, we recommend that the administrative process available to the GRA is exhausted before embarking on any prosecution.
Bringing it All Together
From the above, we have assessed the tax administration policy measures introduced by the Government in the 2020 calendar year. These policies have arisen mainly from the COVID-19 tax reliefs and the 2020 Mid-Year Fiscal Review.
For the Government to be able to meet its revised tax revenue targets, it is essential that the Government puts in place measures to ensure that our tax administration framework in Ghana is very robust to meet the uncertainties ahead.
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Abeku Gyan-Quansah is a Partner in PwC Ghana and the PwC West Africa Indirect Tax Leader. He is a regular speaker on tax matters and faculty lead of the Tax Centre of the PwC Business School in Ghana.