Parliament is considering the report of the Finance Committee on the Revenue Administration (Amendment) Bill, 2020.
The Bill seeks to amend the Revenue Administration Act, 2016 (Act 915) to establish an Independent Tax Appeals Board (ITAB) to hear and determine appeals against tax decisions made by the Commissioner-General, allowing for the payment of a shortfall in tax liability. Such a tax liability results from omissions or misstatements without payment of a penalty, and requires subcontractors of government contracts to submit Tax Clearance Certificates (TCCs).
Mr Kwaku Agyeman Kwarteng, Deputy Minister of Finance moved the motion for the second reading of the Bill.
He said the purpose of the Bill was to amend the Revenue Administration Act, (Act 915) to establish an ITAB to hear and determine appeals against tax decisions made by the Commissioner-General to allow for the payment of a shortfall in tax liability resulting from omissions or misstatements without payment of a penalty, and require subcontractors of government contracts to submit TCCs.
He said in the 2018 Budget and Economic Policy Statement, the government proposed to implement some compliance measures to improve revenue administration in Ghana. He said government therefore proposed the introduction of an Alternative Dispute Resolution (ADR) mechanism to resolve tax disputes.
Mr Kwarteng also explained that ADR was widely accepted as the best and more cost-effective approach to resolving tax disputes and was a prelude to litigation in the law courts. He said the establishment of the ITAB to hear tax matters prior adjudication in the courts was expected to instill confidence in investors and reduce the time spent at the court for both payers and revenue administrators. He said the government views the voluntary tax compliance as the best compliance as its places a lighter administration on government.
Mr Kwarteng also indicated that taxpayers failed to register with the revenue authorities, submit returns, make misstatements in documents or omit relevant information from documents they submit to the authorities.
He said the acts of commission and omission result in under-reporting of information or understatement of taxes that attracted interests and penalties. He said taxpayers could only be penalized when identified by the revenue authorities, which he said imposed a costly burden on revenue administration. He said the voluntary disclosure procedure would therefore relieve taxpayers who voluntarily made disclosures of their infringements of the tax laws to make it easy for the revenue authorities to collect their revenues.
Mr Kwarteng also announced that the establishment of the ITAB was estimated to cost GH2.5 million for the first year and the measure was expected to lead to the registration or voluntary compliance of 1,000 taxpayers.
Dr Mark Assibey-Yeboah, Chairman of the Finance Committee in presenting the Committee’s report observed that the establishment of ITAB to hear tax matters prior to adjudication in the law courts was expected to instill confidence in investors and reduce the time spent on litigation for taxpayers and revenue authorities. He said taxpayers that failed to register with the revenue authorities, submit returns, make misstatements in documents or omit relevant information from documents they submit to the authorities could only be penalized when identified by the revenue authorities, which he noted imposed a costly burden on revenue administration. He said the voluntary disclosure procedure included in the Bill would therefore relieve taxpayers who voluntarily made disclosures of the infringements of the tax laws and make it easy for the revenue authority to collect the revenue. He said the Bill also encouraged more taxpayers to register with the authorities without the fear of being included in penalties.
Mr Ras Mubarak, Member of Parliament (MP) for Kumbungu in a remark stated that in granting amnesty to companies, corporation and individuals that violated tax obligations, they needed to be careful and ensure that there were safe guards in the law in order not to overly abuse the process. He cited for example there were many people in the informal sector whose claims were not paying their taxes even though they made a lot of money. “But if we are not careful, we will see year-in, year-out there are still people violating tax obligation.
That is why I want safeguards that if you were to violate your tax obligations and got an amnesty for year one or year two, there should be punishment if the violation of the tax obligation continues, to serve as deterrent for others,” he added.