The Ghana Revenue Authority (GRA) is gearing up to raise taxes from professional group activities in a bid to meet its tax target and close the gap between its tax revenue and actual outcomes.
With the Commissioner-General’s declared intention to stretch the long arm of government to private dealings between client and doctor, lawyer or engineer where a Value Added Tax (VAT) must be paid to the state on fees paid to such professionals, consumption from transactions that customarily have been un-taxed in the past will for the first time begin falling into the tax net
The new initiative by the GRA also raises the issue of payment of income tax payable by professionals on their earnings from such transactions, which also were hitherto largely outside the tax net.
If the GRA adopts the Marginal Income Tax module where there are different tax rates for different income brackets, it would mean top earners in the professional bracket target will pay a high tax rate, albeit only on the amount of money they have in that top bracket.
The Authority could also be looking at a Progressive Tax, where wealthy individuals pay higher tax rate than less wealthy individuals.
Government has set a revenue target of GHc58.9 billion in the 2019 budget, which is about 25.9 percent higher than the GHc46.8 billion estimated in the 2018 budget and GRA is looking at various ways in which to achieve the targeted increase.
Domestic revenue of GHc57.8 billion is expected to be raised from domestic sources and sub units.
Commissioner-General of the Ghana Revenue Authority (GRA), Mr. Emmanuel Kofi Nti, says the Authority is consequently targeting professional services such as lawyers, doctors, engineers and other professionals who will soon have to issue VAT receipts for services rendered and charged for, while also paying self assessed income tax on their own revenues received as well. The move, the authority believes, will rope in those making commercial gain while not paying their due to the state while at the same time get those using such services to pay consumption tax on their use of such services too.
In 2018, the Ghana Revenue Authority (GRA) failed to meet its target of raising GHC39.4 billion by close of year, managing to only raise 37.6 billion representing a deficit of 5.7%.
The authority however saw an improvement in its custom collection in the last three months and thanks to improved targeting, covered more grounds.
Finance Minister, Ken Ofori-Atta believes enforcing tax compliance would help the government meet its social and developmental obligations.
The Ghana Revenue Authority (GRA) this time around is set to work with the Auditor General and the Special Prosecutor to enforce compliance, with prosecution of defaulters on the cards.
In 2017, the authority collected GH32.4bn as against a target of about GHc34bn, representing 97 percent.
By Michael Eli Dokosi/goldstreetbusiness.com
This story has been updated
