Sunday, 17 November 2019

Tax Expert gives guidelines on how to achieve tax revenue target for 2020

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 Adnan Adams Mohammed 

An acclaimed Tax Expert is urging the Ghana Revenue Authority (GRA) to as a matter of urgency start early with tax education, constant and consistent Value Added Tax (VAT) verification exercises, which should include withholding taxes to help meet the target as set in the 2020 budget statement and economic policy of the government.

The President Akuffo Addo led administration has budgeted for total revenue and grants of GHC 67.07 billion which is about 16.9 per cent of GDP, made up of GHC 65.8 billion domestic revenue for the 2020 fiscal year. The government’s Non-Tax Revenue expectation amounts to GHC 13.13 billion, other revenue of GHC 2.87 billion, grants of GHC 1.24 billion and direct project grants of GHC 1.14 billion. 

This looks heavy and daunting job for the GRA as it is already struggling to meet the 2019 tax revenue targets. The GRA is expected to collect over GHC 45.2 billion by the end of December 2019. Yet, as of September 2019 (three quarters), it had only collected GHC 28.9 billion. There are clear indications that there will be a huge shortfall in revenue collection as compared to the target. It is based on this that, the tax expert has outlined a number of measures as an admonishment to the GRA to implement to help meet the 2020 tax revenue target.       

“GRA needs to start early with tax education, constant and consistent VAT verification exercises, which should include withholding taxes”, Mr Abdullah Ali-Nakyea advised. He added that GRA also need to stop the multiple audits by different units within the same Authority and be focused on one audit with members from all interested units so it is a one-stop Audit than the multiple audits.

“They also, need to stop the multiple audits by different units within the same GRA and be focused on one audit with members from all interested units so it is a one-stop Audit than the multiple audits.

“GRA has to resort to timely resolution of tax disputes rather than holding on to disputes for years without resolution because once they close audits they have the power to reopen a case if they chance upon additional information requiring a re-audit so they don’t lose anything if they close disputes and collect the revenue agreed after the objection has been determined.”

The tax expert alarmed that, the 30% deposit in cases of dispute is, with all due respect inimical to domestic revenue mobilization and the earlier it is done away with so, we revert to the administrative resolution of disputes as pertained in Act 592 before the amendment the better. 

“Now there is no distinction between the administrative resolution of tax disputes and judicial resolution except one is conducted at the court. The key distinction used to be the deposit before one’s case could be heard by the court. The use of 30% as a tool to “forcibly” collect tax does not enhance voluntary tax compliance and also encourages tax evasion than tax avoidance.”

Mr Ali-Nakyea further suggested that GRA needs to train and retrain quite a number of their staff as appreciation of taxation and the tax laws is a challenge. A number of objections could be avoided if the knowledge gap is closed.

GRA has still not appreciated that closing down businesses of taxpayers who owe them is a “last resort” action because now they use it as the first option to recover tax. This leads to a lock-up of more tax types like withholding taxes and VAT because once the person does not operate, no payments are made to suppliers and we lose the withholding tax and VAT that could have been charged. I believe there are so many avenues in the Revenue Administration act to recover tax debts before resorting to garnishment as a last resort so it would be good we applied these recovery measures.

The government through Ministry of Finance has to surely retool and resource GRA for the above measures  

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