Outsource tax audit jobs- GNCCI

11/03/07
GNCCI (fin)
Story: Boahene Asamoah
THE GHANA National Chamber of Commerce and Industry, (GNCCI), the umbrella body of trade and industry in the country has proposed to the authorities to out-source tax audit jobs carried out by the Internal Revenue Commission (IRS) to ensure effective tax monitoring and collection.
A report by the chamber on advocacy for tax reduction and widening of the tax net, which was funded by the Business Sector Advocacy Challenge Fund (BUSAC) said the out-sourcing of tax audits would deal with the inadequate capacity of the IRS.
The report said the audit capacity of the IRS was highly inadequate for any effective monitoring to be done to enhance collection of revenue.
The report observed that while there were some collaboration between existing audit firms and tax practitioners there was the need to enhance that programme by taking measures towards its implementation.
The chamber proposed that existing firms and tax practitioners awarded tax audit jobs be mandated to declare their interests or any conflict of interest by statutory declaration.
The report suggested that ex-staff of the IRS who were already in tax practice or accounting jobs could be recruited, given intensive training in tax auditing and be encouraged to apply for audit jobs.
The report which touched on wide-ranging reforms in the tax administration to enhance efficient tax delivery and widening of the tax net in the country also called for the harmonisation of the various audit units of the IRS, the National tax Audit Bureau and other Audit units of the revenue agencies including the Large tax unit.
It said the activities of revenue agencies were not properly co-ordinated in the area of tax audits which had reduced the efficiency of tax authorities through duplication of efforts and had increased the cost of doing business by tax payers.
The chamber proposed that the activities of all the revenue agencies be merged into one unit to be responsible for all aspects of audits under the various tax laws in the country.
Again, the chamber called for the integration of the IRS with other regulatory bodies such as the Registrar General’s Department and the Serious Fraud Office through the use of Information technology to help prevent fraud, revenue leakage and tocapture new companies in a bid to widen the tax net.
“The IT capabilities of the IRS should be enhanced and integrated with those of other regulatory bodies to facilitate the capturing of many more tax payers into the tax net and to prevent and combat fraud”, the chamber said.
On taxation of overtime work, the chamber observed that the legislative instrument 1811 which amended the taxation of overtime allowances makes taxation of the overtime allowances too generous.
That, the chamber said could encourage the shifting of income from normal employment income to overtime income, thus leading to revenue leakage.
The chamber proposed that the law on overtime allowance be amended to reduce applicable rates. It proposed that overtime allowance of ¢1,200,000 per month should attract tax element of 2.5 per cent. Overtime in excess of ¢1,200,000 per month but less than ¢4 million per month should also attract tax of 10 per cent.
Again, the report said overtime in excess of ¢4 million per month should be taxed at the person’s marginal rate. In effect, the concessionary rates on overtime allowance should be applicable to overtime paid of not more than 50 per cent of monthly income.
On measures to reduce cost of capital, the report expressed concern about capital lock up that businesses suffer in their bid to comply with provision of the tax law.
That, the workshop noted was as a result of tax overpayment and the slow and inefficient refund system.
“Thus businesses have to resort to borrowing and other sources of funding their activities”. This increases the cost of capital of businesses”, the report stated.