A public lecture, organized by the Institute of Chartered Accountants, Ghana (ICAG) has taken place in Accra.



The lecture, the first of the quarterly public lectures for the year 2016, was on the theme ‘Income Tax Act, 2015 (Act 896): What Has Changed?’


Mr Edward  Gyambrah, Deputy Commissioner, Ghana Revenue Authority (GRA), who spoke on the topic, said the objectives of Act 896 were to revise and consolidate the law relating to income tax;  simplify the provisions; make tax more user friendly; retain provisions that are peculiar to income tax administration; enhance efficiency and facilitate compliance; and to broaden the tax base


Other objectives, Mr Gyambrah said, were to remove the narrow and distorted tax base of the Internal Revenue Act, (Act 592), rationalize, streamline and restrict tax concessions; tackle erosion of the tax base; and to align domestic tax rules with current international tax rules


Under the new law, he said, Capital allowance granted would not be deferred although unused capital allowance might be treated as part of business loss while Capital Gains and Gifts were no longer captured under separate chapters in the ITA, but modified and subsumed under employment, business or investment income and taxed accordingly, although individuals might elect to pay a 15 per cent tax on capital gains (now called “gain on realisation of an asset”


He disclosed that compensation and recovery payments under the Income Tax Act (ITA) were now included in calculating income of a person while taxability of judgment debts and other recoveries had now made clear in the ITA.


Mr Gyambrah said under the new Act, income from business included a gain from the realization of capital assets and liabilities of the business; a gift received in respect of the business while income from investment included a gain from the realization of capital assets and liabilities of the business; a gift received in respect of the business; while winnings from lottery was now treated as an investment activity—winning in excess of GHC 2,592 Per Anum to be taxed at rate of 5% final WHT)


Mr Gyambrah said the Act had certain specific provisions for the Petroleum Operations, Minerals and Mining Operations and Financial Institutions.


Modified taxation, he said, had also been introduced for certain eligible resident individuals under the act  by applying imposing presumptive tax on individuals that only had income from certain types of business applying a modified cash basis in calculating income from certain businesses.


He said Act 896 exempted from tax, gains made from realization of assets from a merger, amalgamation or re-organisation where there was a continuity of at least 50 per cent of the underlying ownership.


According to Mr Gyambrah, Private Ruling binds on the CG and also binds on the applicant as far as the transaction in respect of which the ruling is given is concerned.


He said individuals and companies granted temporary concessions from tax in specified sectors were now required to pay 1 per cent tax on their chargeable income during the period of concession.


On Repeals and Savings, he said, LI 1675, as amended, had been saved under Act 896, adding that the provisions in the LI shall be considered to have been made or done under this Act and shall continue to have effect until reviewed, cancelled or terminated.


Mr Emmanuel Asiedu, Tax Partner, KPMG, in his remarks, condemned the imposition of new taxes and higher tax rates, adding that what was required was enforcement of the laws and not the creation of new laws.


In a discussion Mr, Abdallah-Ali-Nakyea, Managing Partner, WTS Ghana, expressed concern about reduced tax rate due to a low tax compliance rate and wondered why out of a six million tax-paying population only 1,500,000 were tax compliant.


Mr Ali-Nakyea also expressed worry that evolution of the law on taxation was creating more problems and complications in its understanding, instead of simplifying the law.


He, therefore, stressed the need to speed up work on the Regulations and Practice Notes to Act 896.


Mrs Angela Peasah, a Council Member, ICAG and Chairperson for the occasion, noted that it was only through taxation that more income could be generated for national development.


Mrs Peasah, therefore called for collaboration with among all stakeholders including the GRA and the Attorney-General’s Department to make good tax laws.


Act 896 is part of the process of the reorganization of the tax laws after the Integration of revenue agencies.


It Is the last of the tax laws  which deal with the charging provisions, the others being the Value Added Tax Act, 2013 (Act 870); Excise Duty Act, 2014 (Act 878); and the Customs Act , 2015 (Act 891).


Source: ISD (G.D. Zaney)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    0

Created: 29 March 2016
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