The Private Enterprises Federation (PEF) has called on government to amend the country’s Income Tax Act, 2015 (Act 896) because it is not business-friendly and is insensitive to development.
Also, the Federation is of the belief that the new Act increases compliance cost.
It said income from an approved unit trust scheme or mutual fund, and the income of a venture capital financing company were taxable at one per cent for the first 10 years, instead of years as the law currently states.
Nana Osei Bonsu, Chief Executive Officer of PEF made the call during a panel discussion in Accra on the Ghana Journalists Association’s programme dubbed, “Business Advocate” on Ghana Television.
The programme was supported by BUSAC Fund, DANIDA, the United States Agency for International Development and the European Union.
Mr Osei Bonsu who spoke on the topic: “Implementation of the Income Tax Act, 2015 (Act 896)”, said some members were not aware of the salient provisions in the Act.
He stated that the ability to appreciate and understand tax laws was critical, saying some of the laws focussed on revenue generation instead of growing the economy.
He said under the new Act, the income of residents was taxed on worldwide basis, whether remitted to the country or not, and that income of non-resident persons continued to be taxed based on source rules.
Mr Osei Bonsu noted that capital gains and gifts were no longer being taxed at a flat rate of 15 per cent but were placed under employment, business and investment income and taxed at up to 25 per cent.
He said taxpayers could no longer defer capital allowance, explaining that capital allowances for a year had to be utilised in that year which created the possibility of a loss.
Mr Osei Bonsu said the federation was calling for a stakeholder dialogue to address the inefficiencies in the new Act because the tax environment should be friendly for all business entities.
Mr Edward Gyamerah, Deputy Commissioner in charge of Policy and Programmes at the Ghana Revenue Authority, said the new Act was to broaden the tax base and remove the narrow and distorted tax base of the Internal Revenue Act, 2000 (Act 592).
He said the Act rationalized, streamlined and restricted tax concessions. It tackled erosion of the tax base and aligned domestic tax rules with current international tax rules.
Mr Gyamerah said the Act provided additional benefits for taxpayers as all taxpayers were now allowed to determine and pay taxes based on their own estimates, carry forward losses and take account of losses on the disposal of capital assets.
He said the withholding tax threshold had also been revised from GHc500 to GHc2,000 to take account of inflation and exclude small value transactions from the withholding tax mechanism.
Mr Isaac Nyame, a Tax Expert, said the new Act needed to be reviewed since it was too high for business enterprises, and that the tax must be competitive for all and sundry.
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