A draft policy on tax exemptions has been completed and will soon be presented to parliament for deliberation with approval into law expected to have been secured by the end of this year.
This was revealed by the Deputy Commissioner, Policy and Programmes of the Ghana Revenue Authority (GRA), Mr. Nathan Nettey during the maiden edition of a series of monthly seminars being organized by the Institute of Directors (IoD) Ghana, in Accra.
The move is as a result of inordinate growth in the revenue forgone due to tax exemptions and the accompanying deliberate and increasing abuse in the sector. For instance, exemptions on import duty, import Value Added Tax (VAT), domestic VAT and import National Health Insurance Levy (NHIL) grew from Gh¢391.2 million in 2010 to Gh¢5.27 billion in 2017.
As a percentage of Gross Domestic Product, the public revenue forgone due to tax exemptions grew from 0.9 percent to 2.6 percent within the stated period under review and this represents a 92.58 percent increase.
The soon to be laid policy, which was drafted by the Ministry of Finance (MoF) and the GRA will seek to reduce the high level of exemptions with the goal of stopping individuals, enterprises and institutions granted exemption from abusing it.
Tax exemptions were introduced in order to provide tax incentives and cushion enterprises and institutions for various strategic purposes.
A representative from the MoF, Dr. Mawuli Gaddah told the Goldstreet Business that a number of such enterprises and institutions granted exemptions have taken due advantage of the process to abuse it, hence the introduction of the policy.
Speaking during the seminar, Mr. Nettey noted that when the policy is fully streamlined, it will contribute enormously in sanitizing the sector, and thus force more of such institutions to meet their tax obligations in full.
Meanwhile, in the quest for tax recovery, the Authority warned that they have prepared dockets for a list of tax defaulters and will soon begin prosecuting them; stressing that the use of all enforcement actions including garnishing of accounts will be applied in the process.
“You will soon be hearing a lot of court actions. We believe that when the court actions come, you wouldn’t call the Commissioner General and plead for clemency”, Mr. Nettey cautioned.
Garnishment refers to a legal process that instructs a third party to deduct payments directly from a debtor’s wage or bank account.
The Goldstreet Business learnt that a number of companies in the petroleum industry will be the most affected as GRA seeks to chase tax defaulters.
By Dundas Whigham
