New Income Tax Law to facilitate compliance

The rationale for passage of the new Income Tax Law is to revise and consolidate the many scattered tax laws and amendments into one document, Mr. Kwaku Opoku-Agyemang-Assistant Commissioner and acting Head of Large Taxpayers Office of the Ghana Revenue Authority, (GRA) has said.

It will also simplify provisions of the Act and make it more user-friendly to enhance efficiency and facilitate compliance.

Mr. Opoku-Agyemang was speaking at a seminar in Accra for Large Tax Payers to help deepen understanding of the new Income Tax Law (Act 896) and clear misconceptions about it. It was also targetted at helping to keep taxpayers abreast of provisions in the new law and how to use it.

It was also in line with the GRA’s desire to enhance education on the new Tax Law to ensure compliance and work together with stakeholders to smoothen the rough edges for effective implementation.

Mr. Dominic Naah, Chief Revenue Officer, in a presentation on the various aspects of the new Income Tax Law said Capital Gains Tax is no longer a separate tax on its own.

He said gains realised on disposal of assets or liabilities are to be included in business or investment income, and taxed at the applicable income tax rate.

The Gift Tax is also no longer a separate tax on its own, he said, adding that gifts received in respect of employment, business and investment are to be included in calculating the gains and profits from these areas.

Mr. Naah said mortgage interest, which was previously available for more than one residential building for individuals, will now be restricted to just one building during the lifetime of that individual.

He said the law also allows deductions for repairs and improvements, while research and development expenses can also be deducted irrespective of whether or not they are of a capital nature.

Mr. Naah said the new Income Law has also introduced a full worldwide basis of taxation for residents, which means residents will now be taxed on all income regardless of source and whether or not foreign income earned is brought into the country.

He said the Act 896 exempts from tax gains made from the realisation of assets from mergers, amalgamation or reorganisation where there is a continuity of at least 50 percent of the underlying ownership.

He said while in the past a ‘private ruling’ was binding only on the Commissioner General, the new Act makes such rulings binding on the applicant as far as the transaction in respect of which the ruling is given.

Mr. Naah said individuals and companies granted temporary concessions from tax in specified sectors are required to pay 1 percent tax on their chargeable income during the period of concession.

The new Income Tax Act 2015, Act (896), was officially launched in 2015 -- aimed at revising and consolidating the law relating to income tax and simplifying the Act’s provisions.

The Act also makes it more user-friendly, retains provisions that are peculiar to income tax administration, and also enhances efficiency as well as facilitating compliance while broadening the tax base -- removing the narrow and distorted tax base of the Internal Revenue Act 2000 (Act 592), thus rationalising, streamlining and restricting tax concessions in the country.