Tax expert urges citizens to question gov’t’s tax exemptions to private entities
Adnan Adams Mohammed
A seasoned tax expert has called on the government to conduct
cost-benefit analysis of tax exemptions before granting them.
Dr. Abdallah Ali-Nakyea, lead consultant at Ali-Nakyea and
Associates have noted that citizens have every right to question tax exemptions
decisions in Ghana especially as they serve as critical incentives for both
domestic and foreign businesses.
According to the tax expert, the purpose of tax exemptions is
to benefit the country in terms of job creation, technology transfers, export
of products and services while calling on businesses to do tax health
assessments to know what might not be going on well with the record keeping
that may attract huge assessments during tax audits.
“Tax exemptions in areas such as Free Zone, companies must
adhere to conditions precedent to the grant of the free zone licenses”, Dr.
Ali-Nakyea suggested during his presentation at the University of Cape Coast
School of Business second edition of the e-seminar series on the topic: “Coronavirus
Pandemic, Tax Relies and Financial Reporting Implications.”
In answering a question posed by a tax auditor about the
possibility of spreading the payment of tax liabilities, Dr. Ali- Nakyea
explained there exists the discretion by the Commissioner to grant any
reasonable payment schedule by taxpayers.
The UCC School of Business second session of the e-seminar
series featured experts and professionals such as: Dr. Abdalah Ali-Nakyea of
Ali-Nakyea & Associates; Dr.Isaac Nyame of Ikerm and Associates; and Dr,
George Tackie, Head, Department of Accounting.
The Dean of the UCC Business School, Prof. John Gatsi in
his introductory comment explained that globally, fiscal and monetary reliefs
have been granted such as tax reliefs, reduction in interest rates, a moratorium
in the payment of interest on outstanding loans and the cancellation of any
planned announcement and payment of dividends especially in the banking sector.
He explained that all these policy decisions and directives
have implications for financial reporting stating that the Coronavirus pandemic
has broad implications for tax professionals, auditors and preparers of
financial statements (management of companies).
According to Prof. Gatsi many companies have not been able
to organize annual general meetings (AGMs) which also has implications for the
approval of strategic plans and budgets among others. He said “AGMs are crucial
in the fiscal and strategic life-cycle of companies. AGMs provide unique
opportunities for shareholders to assess the performance of their companies and
managements by evaluating the financial statements”.
He called for creativity and engagement by professional
bodies in accounting, taxation, auditing, regulatory institutions and
government to deal with emerging challenges. Prof. Gatsi said innovation should
lead the way to ensure that the golden role assigned to shareholders through
AGMs to promote good corporate governance and to make strategic decisions to
foster the going concern of businesses is not truncated due to the Coronavirus
Pandemic.
Prof. Gatsi said, “It was encouraging that CalBank Limited
has announced its Virtual AGM will take place on 24th June 2020”. He asked
that, deadline for AGMs either through virtual or traditional approach should
be concluded early so as to limit possible corporate governance abuses in the
absence of an AGM”.
“Disclosures of relevant events in financial statements will
be critical but how much disclosures will be enough to foster confidence in
financial statements by investors and other interested stakeholders will remain
an important stakeholder question” – Prof. Gatsi.
On the part of Dr. Tackie, he explained that, financial
reporting is an important communication between the company and its
stakeholders to reflect record-keeping in a particular financial year. He
explained that during the pandemic the requirement for proper bookkeeping should
be enhanced because stakeholders will depend on the statements for various
decision making. He explained that professionals such as accountants and
auditors have the duty to maintain quality professional engagement as with or
without coronavirus pandemic, the role played by credible financial statements
will not change.
Dr. Tackie who is also the Head, Department of Accounting,
explained that the requirement to prepare financial statement is rooted in the
Companies Act and the International Financial Reporting Standards. He
admonished that all the measures being taken such as cancellation of dividends
by banks and moratorium on payment of interests have serious implications for
financial reporting that must not be taken for granted.
Also, Dr.Nyame added that it was necessary for Ghana
Revenue Authority to continue to collect tax revenue during the pandemic
because the expenditure burden on the state does not reduce because of the
pandemic.
He said during the pandemic Tax Officers are doing more of
Desk Audit which also means after the pandemic in-depth tax audits may be
conducted on same tax- payers. He advised tax payers to enhance proper record
keeping because after the pandemic intensive tax audits will take place unearth
tax payment abuses that might have taken place during the pandemic.
He advised the public to see the Ghana revue authority as a
human institution that understand the challenges of tax payers. On whether or
not students who left their hostels for about two months can claim some tax
reliefs, Dr. Nyame said no rent income was earned so there is no tax relief
available.
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