Government, in its insatiable quest for more revenue, has imposed taxes on ‘cheap’ loans that employers provide to their employees.
It would not tax loans less than the employee’s three (3) months basic salary for a period not exceeding 12 calendar months.
Per the new tax law, interest income earned from individual savings at a local bank or from the purchase of Government of Ghana bonds (T-bills) are also taxable now.
These were previously tax-free income.
Even though the special gift tax regime has been abolished, all gifts valued at more than GH¢50 must now be added to recipients’ assessable income for tax purposes.
After all the hue and cry for the country’s tax net to be expanded, the government has decided to rake in more revenue to increase the tax burden on taxpayers rather than rope in more individuals and enterprises that hitherto have evaded taxes.
Out of a number of 55 service areas taxed, only one has been reversed leaving the remaining 54 still in force.
Although the law is technically in effect from the date of assent – 1st September, last year, a transitional provision rendered it effective 1st January 2016.
The pay-as-you-earn (PAYE) rate bands have not changed yet. However, the 2016 budget proposes to increase the minimum tax free income from GH¢1,584 to GH¢2,592.
Furthermore, Capital Gains tax has been effectively increased by 5 percentage points to 15 percentage while the absolute limits for quantification of car benefits have also increased to GH¢600 per month, GH¢500 per month and GH¢250 per month for driver and vehicle and fuel, vehicle with fuel or vehicle only/fuel only respectively.
However, mortgage interest deductibility has been limited to only one building per individual in a lifetime.
The withholding tax (WHT) rate bands and threshold have change with the new threshold being GH¢2,000.
The new rates are works – 5 percent and services – 15 percent.
Also, capital gains is now being taxed at the standard corporate tax rate of 25 percent up from the special 15 percent regime, which has now been discontinued.
In the case of the thin-capitalization threshold, it has also been increased from 2:1 to 3:1 (debt: equity) while the VAT threshold for registration has not changed even though the 2016 budget is proposing to increase it to GH¢200,000.
Source: Daily Guide
|Disclaimer: Opinions expressed here are those of the writers and do not reflect those of Peacefmonline.com. Peacefmonline.com accepts no responsibility legal or otherwise for their accuracy of content. Please report any inappropriate content to us, and we will evaluate it as a matter of priority.|