… the role of event organizers
Taxes are said to be the lifeblood of every nation as confirmed by the Supreme Court rulings. Article 174 (1) of Ghana’s 1992 Constitution mandates Parliament to enact laws for the imposition of taxes. Taxes makes up a significant proportion of government’s total revenue for every fiscal year. It is therefore important that the tax net is expanded to cover many more people in order to rake in more revenue for national development.
Players of the Creative Arts and the Entertainment Industry are such category of taxpayers whose contribution to tax revenue cannot be over emphasized. It is thus necessary that public events organizers, event players and the entire entertainment industry are in tune with their tax requirements.
TAXING ENTITIES IN THE ENTERTAINMENT INDUSTRY
The entertainment industry is a very wide sector that is made up of different players with different roles. Each role compliment each other for a successful event to be organized. Some of these entities have been identified as follows:
- Event Organizers – These are the owners of the events.
- Event Actors – These are made up of artists at the event.
- Event Vendors – These are sellers of food, souvenirs and other items including services at events
- Event Centers and Owners – These are places or venues where events are organized and the owners of the facility.
TAX IMPLICATIONS FOR EACH ENTITY
- Event Organizers/Owners:
The Organizers are expected to charge and account for VAT on the sale of event tickets at the standard Rate. Further. Depending on the entity structure the Event Organizer is also required to account for either Corporate Income Tax (CIT) or Personal Income Tax (PIT) on yearly profits from the sale of event tickets and other incomes. They are expected to file and pay on their CIT/PIT on quarterly basis while VAT and accompanied levies are filed and paid monthly. Withholding taxes on payments made to Event Actors and Event Center Owners must also be accounted for monthly.
- Event Actors: The Income stream of actors among others includes; sales of Merchandise, Royalties, Endorsement fees, live show, etc. Event Actors are required to File yearly returns on all incomes and take credit of withholding taxes suffered and other allowable reliefs. Note that Event Actors who endorses a product are charged ten percent (10%) final Withholding Tax on the Endorsement Fees . In line with the streams of income, an actor may Charge and account for VAT and Levies every month on sales made if qualified to register for VAT.
- Event Vendors: File returns on CIT/PIT on yearly basis and take credit of withholding taxes suffered. Collect VAT and Levies on sales made if qualified to register for VAT. File returns every month and make payment. Withhold taxes from payment made to event center owners for making space available.
- Event Centre Owners: Facilities owners are to register and charge VAT and other Levies and file same on monthly basis. File returns on CIT/PIT on yearly basis and make payment on quarterly basis
TAX REGISTRATION
In accordance with Section 1 of Internal Revenue (Registration of Business) Act 2005 (Act 684) as Amended: (1) A person shall not carry on any business unless that person has registered the business with the Commissioner General. Thus a person shall not carry on any business in Ghana unless registered with the tax authorities under the tax laws of Ghana. So before any person does business in Ghana, apart from the Registrar General Department (RGD), the next point of call should be at the Ghana Revenue Authority (GRA).
The Value Added Tax Act, 2013, Act 870 as amended stipulates that “A promoter of public entertainment, shall apply for registration at least forty-eight hours before the commencement of the public entertainment if, within any period of twelve or less month that includes the date of the public entertainment to which the application relates, the total value of taxable supplies of the promoter or the licensee or proprietor is reasonably expected to exceed ten thousand Ghana cedis (Section 11 (1)(c) of Act 870 as amended).
What is Public entertainment? The VAT Act defines public entertainment to include,
- Musical entertainment.
- Theatrical performance.
- Comedy show.
- Dance performance.
- Circus show.
- Shows connected to a festival.
- Any other similar public show.
From the position of the law and the occurrence in the entertainment industry, it is reasonable to conclude that all those in the sector qualifies to register with GRA for tax purposes. It is thus imperative for industry players to comply with the law to avoid sanctions prescribed by the law.
INPUT TAX DEDUCTION IN THE ENTERTAINMENT INDUSTRY
Sec. 48 of the VAT Act, 2013, Act 870 allows for deduction of input tax from output tax collected before payment is made to GRA. However,it must be noted that Sec 48 (6) allows a person in the entertainment sector to deduct inputs if supplies made are related to that sector. The VAT Regulations, 2016 (L.I. 2243) classifies the following as entertainment expenses for which input can be deducted: End of year parties and lunches for clients, business associates and staff. Hiring of venues for parties and lunches for clients, business associates and staff. Provision of free meals at workplace canteens; Tea, coffee and other beverages or snacks provided to staff; Entertainment of customers and clients including business lunches in restaurants, nightclubs, theaters or sporting events.
Meals, beverages, entertainment shows and any other hospitality supplied to customers and clients during product launches and promotional events; Private plane, yachts and similar capital goods used for entertainment. Promoters of such businesses can deduct VAT on business entertainment expenses or inputs. It must be noted that, restaurants and hotels are entertainment businesses. They can deduct VAT on their inputs, but not inputs used for their own entertainment.
PURCHASE OF VAT ENTERTAINMENT COUPONS
Event Organizers are expected to purchase VAT Coupons and issue at the gates to patrons. VAT Coupons can be purchase at the nearest GRA office. Coupons are in various denominations ranging from Ghs5.00 to Ghs50.00. However, in recent times due to technological advancement, purchases of tickets are done using short code or via online (E-Tickets). Prices of these tickets paid via USSD Code or online must include VAT at the standard rate and its accompanied levies.
RIGHTSAND OBLIGATIONS OF TAXPAYERS
Players in the entertainment industry are requires to register with GRA and file their tax returns by due dates. For instance, PAYE Returns must be submitted by 15th day after the end of each calendar Month. Self Assessment Estimates by the due date for payment of first installment (31st March); PIT Annual Returns by 30th April for Sole Proprietors, Employees and Partners of Partnership; CIT Annual Returns by 30th April or 4 months after the accounting date of the company concerned; VAT & NHIL/GETFund/COVID 19 Levies must be filed by the last working day of the following month.
Having mentioned but a few of the responsibilities of industry players, we will like to mention rights accrued. Industry players have the right to object to an assessment raised by the Commissioner General. They also have right to apply for tax clearance certificate as and when needed and apply for an exemption if qualified under the law. They also have right to tax information and education necessary for them to make informed decision. An inalienable right to confidentiality of personal details, right to privacy and right to legal and professional representation are all prescribed in the tax laws.
CONCLUSION AND WAY FORWARD
The entertainment industry is a huge sector that generate a lot of income for the players of the sector, it is therefore fair that the appropriate taxes would be paid from the income received. This is the way to go as their way of supporting tax revenue drive of the government through the Ghana Revenue Authority.
Event organizers together with the other players are therefore obligated to be honest and transparent in disclosing every tax information, keep proper records of their activities, file and pay taxes on time and issue VAT invoices for any business transaction which attracts VAT. We thus expect collaboration with GRA staff deployed to monitor entertainment events.
The Ghana Tourist Authority (GTA) being responsible for the players of the entertainment fraternity is being called upon to liaise with GRA for constant education for players in the industry. With the current festive season and the GTA organized programme under the December in GH – Beyond the Return, it is expected that revenue due the nation from this sector will be realized. Let all of us play our role by demanding invoices or receipts when patronizing such events. As good corporate citizens let’s remember that “our taxes our future”
References: 1. Income Tax Act, 2015, Act 896 as amended 2. VAT Act, 2013, Act 870 as amended. 3. VAT Regulations, 2016, L.I 2243. 4. https://www.scg.com.gh/2019/04/08/value-added-tax-basics/
The writers are staff of the Ghana Revenue Authority (GRA) with the Accra Central and East Enforcement Units respectively. You can reach them on Tel No. +233 24 454 2671/ 24 220 5435 or Emails: [email protected] /[email protected]
