New Income Tax law spreads the net wider…
The new Income Tax Act, 2015 (Act 896), was basically passed to revise and consolidate the law relating to income tax.
Among its specific aims is to simplify provisions of the Act to make it more user-friendly, enhance efficiency and facilitate compliance among a host of others.
Act 896 is meant to broaden the tax base and remove the narrow and distorted tax base of the Internal Revenue Act (Act 592). The new Act is also to rationalise, streamline and restrict tax concessions.
In spite of these well-intended actions the new income tax law is causing angst in many quarters, and the backlash has not been favourable.
In essence, it entails that all residents will be taxed on all income regardless of source and whether or not foreign income is earned is brought into the country.
In order to demystify its provisions and allay fear that is being entertained in certain circles, a breakfast series was held by a reputed communications company and resource persons were at hand to debate the issues and clarify where doubt was expressed.
Mr. Abdallah Ali-Nakyea, a tax consultant, observed that the new Act has moved from source jurisdiction to worldwide income jurisdiction and it is good for the economy, he noted, because it means the country has a wider tax net to derive more revenue for growth and development.
Widening the tax base of the economy to get more Ghanaians to honour their tax obligations has always been a topical issue in the country, and if steps have been taken in that direction it serves as one major obstacle overcome.
In fact, a Deputy Commissioner in charge of Policy and Programmes at the Ghana Revenue Authority (GRA), Edward Gyamerah, has observed that the penalty for failure to file tax returns is more punitive under Act 896.
This is instructive because it means there is less likelihood of evasion since the consequences are dire. Generating internal revenue is critical to the country’s ability to undertake development projects without necessarily having to borrow from the international market at punitive rates.
In the opinion of this Paper, the new Act has been necessitated by the need to broaden the tax base and make the law more relevant to the economic environment. The new law is being assailed because of certain provisions which need explanation to help assuage fears.