Exempt companies on Self Assesment from withholding tax

Story: Boahene Asamoah, Dodowa

A FORMER Commissioner of the Internal Revenue Service (IRS), Mr David Adom, has called on the government to exempt all taxpayers and companies on self assessment from withholding tax at source on corporate income.
Mr Adom said companies on self assessment did not get automatic refund of overpaid taxes adding that by the provisions of the Internal Revenue Act. 2000 (Act 592), the Commissioner was deemed to have assessed a person who filed his self assessed tax.
He said such companies had over the years proven a high level of compliance by filing their taxes, promptly and accurately and that such companies should not be made to go through the process of tax refunds.
He said “self assessment system should be fully implemented so that a person who has self assessed and established over payments has the overpaid taxes automatically refunded or credited”.
Delivering a report on a research for advocacy on tax reduction and widening of the tax net at a workshop organised by the Ghana Chamber of Commerce and Industry (GNCCI), Mr Adom of AA&K Services, a tax consulting firm, said such a move could improve the business climate and could push other companies to comply by filing their taxes accurately.
The workshop supported by the Business Sector Advocacy Challenge Fund (BUSAC) and was aimed at lobbying government to further reduce corporate tax and widening of the tax net.
Participants from the Ministries of Finance, Trade, Industry, Private Sector development and President’s Special Initiative (PSI) Internal Revenue Service, Customs, Excise and Preventive Service (CEPS) and Value Added Tax (VAT) Secretariat.
Mr Adom also suggested that the system of withholding tax should be automated to ensure that the delays in the issuance of tax credit certificate was reduced.
“A comprehensive programme should be put in place to de-emphasise the dependence of the direct administration on withholding tax from corporate income as this often results in entities paying tax out of capital and therefore has adverse effect on business growth”, he stated.
Mr Adom said the research revealed that businesses were concerned about the high capital lock up in their bid to comply with provisions of the tax law.

Mr Adom said in the face of inadequate capacity the frequency of refund, audits of companies should be reduced by raising the threshold for automatic refunds to ¢20 million.
“It was proposed that the IRS should speed up audits for refunds and where overpayments have been established refunds should be done within three months”, he said.
The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu said, while the association was advocating for a further reduction in the taxes, it must not lose sight of the government’s aim to raise additional taxes.
He said the workshop was relevant because it was through dialogue and brainstorm sessions that ideas could be generated to expand the tax net in the country.
Mr Baah-Wiredu said “ I wish to emphasis here that any advocacy to influence government policy formulation should be based on empiricism as opposed to just appealing to emotions”.
He said the decision by the chamber to undertake the study to carefully and critically look at the appropriateness of tax rates and to make recommendations to government was a step in the right direction.
The finance minister underscored the importance of widening the tax net to make everybody contribute his or her quota to the national coffers.
“ I take it that participants are fully aware of the benefits of a wider and efficient tax collection system without which no government can fully undertake its responsibilities of providing services, amenities and infrastructure to its people”, he emphasised.
The President of the GNNCI, Mr Wilson Atta Krofa, called for a legislation that would ensure that all businesses registered in the country belonged to one association in the country.
That, he said, would ensure the monitoring of such businesses and also ensure that such businesses pay their taxes.
Mr Akrofa stated that the chambers advocacy was in support of the government’s goal to reach out to informal sector.
The President called for a closer collaboration between the IRS, CEPS and other government agencies to educate professional bodies and the business community on the need for tax compliance.