Is digitization of the taxation system the game-changer for Ghana?


Why digitization of tax collection in Ghana is a game changer?

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Before investing in countries, investors look into the tax policies of potential destinations or host nations, based on how easy the tax system is and what the tax laws are. Switching to digital allows convenient mobile access anywhere whether at home or even on the go or office. You just require a mobile device to achieve all such transactions and everything becomes easier.

Aside from the convenience to the taxpayer, digitization is meant to enforce compliance. Until recently, revenue collections in Ghana were made in the small, medium and large tax offices across the country. But these offices do not exist in certain areas of the country. For instance, the nearest medium taxpayer office for persons living in Takwa is Takoradi, thus this new switch to Taxpayers Service Centres [TSCs] erases this huddle regardless of the category the one falls under. Just visit the nearest GRA revenue office to file and make payments or at your convenience, the new cashless policy allows these transactions online. 

This new initiation is also meant to curb tax fraud and eliminate questions like “where does the tax I pay go to?” It also helps to erase doubts that the tax system is porous yet cumbersome to navigate as is mostly the complaints of Ghanaians abroad who perhaps experienced more advanced taxing systems while living in the West.

If it is a culture then why not create foundations for such benefiting culture?

By merging the tax ID number with the Ecowas Card in Ghana to serve as an alert medium for tax evaders. Foresight, in the future all government business transactions will be made with the card and with a unique number too to detect and alert tax collectors of undisclosed ventures.

GRA finds difficulty in giving an actual account of the total tax paying population per their register. Effective first July the grace duration from May 1st ends and as such all cash services will not be accepted at GRA offices. For payment, 32 designated banks are to transact tax businesses, allowing trained officers to interact with the public on how to use the mobile payment method…*222# following the prompts.

Transactions are not limited by per-bank for instance a Standbic bank user can pay at any Ecobank branch and it will only take the usual 48 hours for third party checks to clear the deadline of extra charges.

The government did not anticipate the lockdown. The 2020 revenue target was revised to GHc42,769.50 billion from GH¢47,253.95 billion when Covid-19 hit the country. but they[GRA] still got GH¢45,338.69 million thus exceeding their target. 

With regards to the penalties, in a situation where defaulters are to be audited with arrears spanning over 4 years and above, the law has mandated fines for those debtors and interest is compounded by the Bank of Ghana discount rate plus a quarter of that rate, 125%. After summation, the interest can more than double the actual principal in such cases, defaulters are allowed to apply between April-September 30th to apply for a weaver.

Unsubmitted returns attract a penalty for every period for instance a month, VAT withholding attracts a penalty of 500 currency points and 10 currency points every day it continues to be outstanding. Communication tax attracts 2000 currency points for failure to file and 200 currency points every day. The monetary value of currency point as referred to in the Income Tax Act, 2015 (Act 896) stands at GHc1.00

A tax waiver could be granted to defaulters allowing them to pay only the outstanding principal without the interest and penalties.

By Jamila Abdul Wahab Follow on Twitter @activetvgh


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