According to the Alternative Dispute Resolution Act, 2010 (Act 798) (‘the ADR Act’), Alternative Dispute Resolution (ADR) is a collective description of methods for resolving disputes other than the normal traditional court system. ADR has proven to be an effective means of resolving tax disputes. In other jurisdictions such as Australia, United States of America, Canada, China, United Kingdom, etc., ADR is being used to resolve tax disputes.
Under the ADR Act, ADR mechanisms include Negotiation, Mediation, Arbitration, Customary Arbitration, Victim Offender Mediation and others. That notwithstanding, the aim of this article is to focus on:
- Overviewing powers of the Commissioner-General of the Ghana Revenue Authority (GRA);
- Critiquing powers of the Commissioner-General
- Reviewing the Tax Appeal Board’s role in resolving tax disputes
- Making recommendation to the Tax Appeal Board, and
- Discussing how Victim Offender Mediation can resolve tax disputes
Overview of the Commissioner-General (CG) of the Ghana Revenue Authority (GRA)
The overarching goal of every revenue agency is the efficient assessment, collection and enforcement of taxes and tax laws. The GRA is responsible through the CG for administering and giving effect to tax laws in accordance with provisions of the Ghana Revenue Authority Act, 2009 (Act 791).
Part of the powers delegated to the CG by the Revenue Administration Act, 2016 (Act 915), include assessment of tax. This is done either by adjusted assessment when the CG discovers that a case of fraud, willful default or serious omission by or on behalf of a taxpayer in order to correct and impose tax liability; or by a pre-emptive assessment whereby the CG assesses the liability of tax payable or to become payable by a person under a tax law, whether or not the person is required to file a tax return.
Prior to an objection by the taxpayer to any of these assessments, the CG is required to serve a written notice of assessment to the taxpayer. In that case, the CG is deemed to have made a decision. In accordance with the Act, a person who is dissatisfied with a tax decision may lodge an objection. However, the Act says that an objection against a tax decision will not be entertained unless the person has:
- In the case of import duties and taxes, paid all outstanding taxes including the full amount of the tax in dispute; and
- In the case of other taxes, paid all outstanding taxes including thirty percent (30%) of the tax in dispute
From the above, it can be said that the CG can unfairly exercise his discretion to impose liability on a person who might not be liable, and whose assets will be taken charge of if he fails to pay those outstanding taxes. Also, the law says that an appeal to the tax appeals division of the High Court against an objection decision shall not operate as a suspension of the objection decision. For these reasons, it is my considered opinion that the resolution of tax dispute in the criminal justice system or court system is prejudicial to the taxpayer.
Critique on powers of the Commissioner-General
The Revenue Administration Act, 2016 (Act 915) says that a person who is dissatisfied with a tax assessment may lodge an objection to the assessment within thirty days of serving the notice. This provision is essential for the fact that it tells you how notice for a tax decision is to be served. So if a notice is served on you, you have thirty days to challenge the revenue authority’s assessment.
Although a taxpayer may before expiration of the period, in writing, apply to the CG for an extension of time to file an objection, when the CG does not serve the person with notice of the decision within sixty days, the person may, by notice in writing to the CG, elect to treat the CG as having made a decision to disallow the objection. In other words, when you do not hear from the CG, the silence means that the objection has been refused by the CG without showing cause or reason.
Furthermore, Act 915 provides that a person who is dissatisfied with a decision of the CG may appeal the decision within thirty days of the decision. Thus, if you do not object within the thirty days it becomes final. It must however be duly noted that in addition to the fact an appeal against an objection decision does not operate as a suspension of the objection decision, a taxpayer cannot go to court against an assessment when an objection decision has not been made by the CG.
That is to say, even though a taxpayer may not be liable after an assessment, the law says that he has no right to appeal to court if the CG has not made an objection decision, which makes it imperative to say that the powers of the CG are quasi-judicial. This is because the right to appeal is made subject to the decision of the CG.
The Independent Tax Appeals Board
Parliament has passed the Revenue Administration (Amendment) Act, 2020, (Act 1029) which has amended four sections of the Revenue Administration Act, 2016, (Act 915).
The amendment’s main focus is to provide for the establishment of an Independent Tax Appeals Board and other related matters. The function of the Appeals Board is to hear and determine appeals against tax decisions of the CG with respect to objections to tax decisions and assessments. This was hitherto performed by the CG. In addition, there is a modification of the penalty for making false or misleading statements in filing tax returns. The Act has been assented by the President of Ghana to come into force.
Hopes are that with the advent of Act 1029, it is a good intervention for the taxpayer by way of replacing the power of the CG to hear tax appeals with an Independent Tax Appeals Board. But, first of all, one may ask: has establishment of the Appeals Board addressed the issue under Act 915, that an objection against a tax decision will not be entertained by the CG unless the person has:
- In the case of import duties and taxes, paid all outstanding taxes including the full amount of the tax in dispute; and
- In the case of other taxes, paid all outstanding taxes including thirty percent of the tax in dispute.
Also, the amendment has provided some exemptions to the penalty for making false and misleading statements. By the way, we should note that, as provided under Act 1029 and other revenue laws, modest retroactive application of legislations is permissible – i.e., the law can be applied to take effect from a date in the past. This will be discussed in further detail later on; but, for now, this article seeks to take into account the establishment of the Independent Tax Appeals Board under Act 1029.
Summary and recommendations to the Tax Appeals Board
With establishment of the Independent Tax Appeals Board under Act 1029, it is observed that:
- The independence of the Tax Appeals Board is nominal. This is because with the appointing power of the panel from government, particularly the Finance Minister, government regulations can influence the behaviour of the panel; often without changing its underlying values and motivations.
- The establishment of the Appeals Board has not addressed the issue under Act 915 that an objection to a tax decision will not be entertained by the CG unless the person has made the full down-payment of the disputed tax in the case of import duties, and 30 percent of the disputed tax in other cases.
- The amendment does not provide that appeal to the Appeals Board against an objection decision shall operate as a suspension of the actions taken by the CG.
- Also the Tax Appeals Board has a reserve of an autonomy subject to the appeal jurisdiction of the Court for review – which includes an injunction to restrain an execution until the Court makes a final decision, a certiorari, to quash the tax decision or a declaration by the Court on the matter brought forth.
On that note, it is recommended that:
- Hearing the dispute by the Tax Appeals Board must be zonal. This is because the requirement that all the sixteen (16) regions in Ghana should have a Secretariat would overstretch the duty of the eleven (11) member committee.
- Parliament ought to consider further amendment of Act 1029 to repeal the requirement of full down-payment of the disputed tax in the case of import duties, and thirty percent (30%) of the disputed tax in other cases before an objection is entertained by the CG. For the reason that it is a violation of fair trial to be found guilty of an offence before being given a chance to prove innocence. Otherwise, the Tax Appeals Board will be a mere creation of statute.
- The Board incorporates a compulsory pretrial ADR mechanism, such as Victim-Offender Mediation, in the appeal processes
How Victim-Offender Mediation (V.O.M) can resolve tax disputes
VOM is an approach to restore justice in response to crime by organising face-to-face discussions between the victim and the offender in a structured setting with the help of a mediator, to hold the offender accountable and make amends for the harm caused to victims. Another name for victim-offender mediation is restorative justice.
VOM is essential for an effective criminal justice system, because more often than not outcomes of the criminal justice system leave both the offender and complainant unsatisfied. But VOM ensures that the case is disposed of in a manner satisfactory to all parties.
In the case of tax dispute, the offender is alleged to be the taxpayer and the victim is the state. So what this means is that instead of enforcing the unilateral decision by GRA to punish the taxpayer (who could be innocent) for evading tax, there ought to be an opportunity for the taxpayer and GRA to meet, aided by a third party neutral (mediator) to hear both sides to try and format an amicable resolution that will not leave both parties content.
Finally, a good mediator will reconcile the ‘interest-base’ rather than the ‘position-base’ of the issues in dispute. In the end, the mediator will explore whether the interests of the parties reaching an agreement exceeds the cost of a court dispute.
>>>the writer is a Professional Law Student. Email: [email protected]
