Use euphoria on tax cuts to widen tax net – PwC

Auditing firm PricewaterhouseCoopers (PwC) has called on government to take advantage of the Tax Administrative Law as it comes into force this year to broaden the tax base.

According to the firm, government can use the law to encourage the private sector to fulfil their tax obligations to recover the GHS5.4billion that was captured as tax cuts in the budget.

Per the new law, business owners and individuals are required to have tax identification numbers before they can acquire land and even open bank accounts, among others.

Speaking to Class Business on the sidelines of a post-analysis forum of the 2017 budget, a partner, and tax leader at PricewaterhouseCoopers, George Kwatia, stated that the euphoria surrounding the tax abolishment presents a perfect opportunity for government to implement the new tax law.

He said: “Spare parts dealers are not supposed to pay duties [and] they are excited about it. But obviously there should be some way of dealing with this. Not everybody and anybody probably should just walk to the port and say, ‘I’m a spare parts dealer, I’m here to clear my goods, therefore, I’m not going to pay taxes.’

If you want to broaden the tax base, out of the excitement that the spare parts dealers have, you tell them ‘all of you, before you can get your duties exempted on your goods you are importing, you need a tax identification number because we want to identify you as an Abossey Okai spare parts dealer before we give it to you, or you are at Kumasi Suame or any other market or area that you selling the goods.’

If you need to be identified before being exempted [from paying duties], why wouldn’t they do so? Of course it may be in this regime that spare parts are being exempted. Another government will come and probably not exempt it or they may impose a little bit of duty.

But you are already being captured in the system as having a tax identification number and when it comes to the crunch that you may now have to pay tax you cannot withdraw from the process anymore because you are already caught in the net.”