Tax certainty is often considered to be one of the pillars of a good tax system. It provides clarity to taxpayers in terms of planning how much tax to pay, how to pay, when to pay, the procedure to use in resolving matters in dispute and timelines for the resolution of those matters.
The duration for the resolution of tax controversy matters is crucial at the administrative level as the tax authority is both an arbiter and an interested party. Through the Revenue Administration Act, 2016, Act 915 (as amended), the Parliament of Ghana, enacted some provisions which could be argued to impair tax certainty for taxpayers, and which may need reconsideration.
This article focuses on potential uncertainty arising from tax objection decision by the Commissioner-General (CG) of the Ghana Revenue Authority (GRA) and considers how the government could proactively take steps to provide greater certainty for businesses.
Timeline for objection decision by CG
The combined effect of Sections 43(2) and (3) of Act 915 means that a taxpayer who has objected to a tax decision will not necessarily receive a response from the CG under a defined period. This is after the taxpayer had paid either the 30% or 100% of tax-in-dispute (as the case may be), or obtained a waiver, variation, or suspension to the upfront tax payment pursuant to Sections 42 (5) and (6) of Act 915. Where a taxpayer does not hear from the CG in the objection decision process, a person could either (i) wait (with regular follow-ups) until a response is received from the CG; or (ii) elect to deem the CG’s silence as an unfavorable objection decision having been made by the CG.
Option (ii) does not seem ideal for a taxpayer as the grounds for the said unfavorable decision of the CG will be unknown when appealing to the Independent Tax Appeals Board. In my experience, it is not a best practice in civil matters for a taxpayer to be forced to “deem” an unfavorable decision by a tax authority as a result of the latter’s failure to respond, particularly where no reasons have been given for a decision. In the case of option (i), waiting to hear from the CG could be expensive because of the time and effort it may take to chase the CG as the CG may have already received 30% or 100% of the tax-in-dispute in compliance with law, and may, therefore, not be incentivized to quicken the resolution process. This may in turn compound the cost of conducting business in Ghana.
Recommendation
To promote a quicker resolution of the matters in dispute and ensure fairness to taxpayers, the government should consider a redesign of the policy framework by:
- Setting a timeline for the CG to respond to an objection to a tax decision. A strict and mandatory timeline (e.g., 60 days) for the CG to respond would appear to be fair for businesses and the GRA alike.
- Indicating that a failure by the CG to respond within set timeline for objection decisions would result in a favorable outcome for the taxpayer in question. This is similar to situations where a taxpayer’s failure to respond to a tax decision within the set timeline results in a favorable outcome for the GRA.
- Including a provision for an additional 30-day extension in the objection decision process to the extent that it is deemed necessary to give the tax authority the leeway to address additional matters that may be required. Where such is the case, such extension should be through a notice in writing by the CG to the taxpayer within the 60-day timeline to ensure transparency.
The above would make the GRA more proactive and agile in resolving tax controversy matters and promote ease of doing business in Ghana. Further, at the same time as boosting tax certainty, it could also help the government collect unpaid disputed taxes which hitherto may be hanging because of unresolved disputes. Additionally, it could help remove laxity arising from delays in tax administration as tax officers would be more proactive in mitigating objection decisions deemed void for failure to act within time. This could promote a more efficient tax administration system.
The above recommendation is akin to what prevails in Kenya which has similar tax procedure to Ghana in relation to tax objection decisions. Kenya is a common law jurisdiction and has many similar economic attributes like Ghana, hence it is a good benchmark for reference.
Section 51(11) of Kenya Tax Procedure Act, No. 29 of 2015 (as amended) which deals with the timeline for tax objection decisions provides that “The Commissioner shall make the objection decision within sixty days from the date of receipt of a valid notice of objection failure to which the objection shall be deemed to be allowed.” Thus, in Kenya the provision for an objection decision is made in mandatory terms and compels the Commissioner to respond within 60 days. If this timeline is missed, the Commissioner is deemed to have decided in favorable terms for the taxpayer, which is the direct opposite of the case of Ghana. Indeed, the first version of Ghana’s law (Act 915) had similar provisions as Kenya’s. This was, unfortunately, amended.
In the case of Eastleigh Mall Limited v. Commissioner of Investigations & Enforcement [2023] KEHC 20000 (KLR), the High Court of Kenya said that the provisions of the said section 51(11) of the Kenya Tax Procedures Act are in mandatory terms, and the timeline is not a mere procedural technicality. This reinforces the importance of timelines in civil procedural matters which promotes tax certainty, fosters business continuity and proper planning.
Conclusion
It is my opinion that to the extent that Parliament of Ghana in its wisdom believes a taxpayer has 30 days to object to a tax decision under Section 42 of Act 915, and where the objection fails, the tax assessment becomes final, a 60-day period (plus a possible additional 30 days) for the CG to make an objection decision is reasonable. This is because (i) it is the same tax matter in dispute for which a taxpayer is given 30 days to address (subject to any extension that may be granted by the CG); (ii) the burden of proof sits with a taxpayer and it would ordinarily and reasonably be expected to require more time to address the issues in dispute; and (iii) the dealings between GRA and a taxpayer should be viewed as conduct of business which requires promptness from both parties to help build an efficient tax system.
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.
Kwasi Nyantakyi Owiredu is the author of this article. Kwasi is a Director, International Tax & Transaction Services, with Ernst & Young LLP, United Kingdom. He may be contacted at [email protected]. The article was reviewed by Isaac Nketiah Sarpong, Tax Partner with Ernst & Young Chartered Accountants, Ghana. He may be contacted at [email protected].
