In reference to the Revenue Administration Act, 2016 (Act 915), tax means a duty, levy, charge, rate, fee, interest, penalty or any other amount imposed by a tax law or to be collected by, or paid to, the Commissioner-General under a tax law. Act 915 defines a taxpayer as a person liable to pay tax.
Primary Tax Liability-Assessment
The Ghana Revenue Authority is responsible, through the Commissioner-General, for administering and giving effect to tax laws. Act 915 classifies tax assessments into four main types. These are Self-Assessment, Pre-emptive Assessment, Adjusted Assessment, and the Commissioner-General’s Assessment.
- (1) Assessment of tax is made by way of
(a) self-assessment, where a person is obliged to file a tax return; and
(b) the Commissioner-General making an assessment in other cases, including where a self-assessment is adjusted.
(2) Where a person fails to file a tax return on time, the Commissioner-General may, using best judgment and information reasonably available to the Commissioner-General, assess the person.
(3) The Commissioner-General may adjust an assessment.
(4) The Commissioner-General may make an assessment at any time, including an adjusted assessment where the Commissioner-General discovers a case of fraud, wilful default or serious omission by or on behalf of a taxpayer.
Pre-emptive Assessment
- (1) The Commissioner-General may, in the circumstances specified in section 28 (3), make a pre-emptive assessment of tax payable or to become payable by a person under a tax law whether or not the person is required to file a tax return. By implication, provisions in section 28 (3) empower the GRA to secure tax liabilities before a person disappears, closes down, or goes bankrupt, particularly when they have failed to maintain proper records.
- The Commissioner-General may accept security for tax liabilities (current/future) instead of issuing a pre-emptive assessment.
- Pre-emptive assessments or security amounts must be based on best judgment and available information.
- These assessments can cover specific periods, events, or matters defined in the notice.
- A pre-emptive assessment does not cancel the requirement to file tax returns unless stated otherwise.
- Filing a tax return (including self-assessment) does not invalidate a pre-emptive assessment.
- Payments made under a pre-emptive assessment are credited towards tax payable on a self-assessment for the same period/event.
Adjusted assessment
- (1) The Commissioner-General may adjust an assessment in a manner that ensures that the taxpayer is liable for the correct amount of tax in the circumstances to which the assessment relates.
(2) The Commissioner-General shall use best judgement and information reasonably available in making an adjusted assessment.
(3) The Commissioner-General shall not adjust an assessment that has been adjusted pursuant to a decision of a court unless the decision is vacated.
(4) An assessment ceases to have effect to the extent to which it is adjusted.
Notice of assessment
- (1) Where the Commissioner-General makes an assessment under a tax law, the Commissioner-General shall serve a written notice of the assessment on the taxpayer. In addition to any specific tax law requirements, the Commissioner-General must include the following in a notice of assessment:
Taxpayer Details: Name and Taxpayer Identification Number (TIN).
Assessment Details: The calculated tax payable, the net amount due (after credits/pre-payments), the method of calculation, and the reasons for the assessment.
Procedural Details: The payment deadline and information on how to object to the assessment (time, place, and manner).
Tax Decisions
Tax law recognises the rights and obligations of a taxpayer and tax authority. It is a cardinal duty of a taxpayer to arrange their tax affairs in such a way that they do not pay more in taxes than required by law. In the same vein, tax authorities are to ensure that taxpayers pay the correct amount of tax required of them. The Commissioner-General is empowered under Section 41 of Act 915 to make a tax decision. Act 915 defines a tax decision in Section 41 (1) to mean; “a decision made by the Commissioner-General under a tax law, including an assessment or omission”. Section 41 further provides an exclusion list of decisions of the Commissioner-General that does not constitute a tax decision. Nonetheless, the following are conclusive evidence that a tax decision has been made and is correct:
(a) in the case of a self-assessment, the tax return that resulted in the assessment or a document under the hand of the Commissioner-General purporting to be a copy of the tax return;
(b) in the case of other assessments, the notice of assessment or a document under the hand of the Commissioner-General purporting to be a copy of the notice; and
(c) in the case of any other tax decision, written notice of the decision under the hand of the Commissioner-General or a document under the hand of the Commissioner-General purporting to be a copy of the decision
Tax Disputes
A tax dispute is a disagreement between a taxpayer and the tax authority (GRA) about how much tax is owed, how the law applies, or whether the taxpayer has complied with tax obligations. Disputes or disagreement may stem from various sources including (1) missing or inconsistent documentation, (2) misinterpretation of tax rules, (3) VAT classification issues or failure to charge VAT or VAT refund challenges, (4) withholding tax errors,(5) PAYE under-deductions, (6) transfer pricing concerns (7) corporate income tax adjustments or (8) disallowed expenses. Where the Commissioner-General makes a tax decision and a taxpayer disagrees with the Commissioner-General, then tax disputes arises which must be resolved through a dispute resolution process. Taxpayers can only object to a tax decision made by the Commissioner-General.
Objecting to a Tax Decision
Every taxpayer has the right to object to the tax decision of the Commissioner-General. Taxpayers are not bound by the decision of the Commissioner-General, rather the law permits them to object or appeal to the tax decision made by the Commissioner-General. Section 42(1) of Act 915 stipulates that; “a person who is dissatisfied with a tax decision that directly affects that person may lodge an objection to the decision with the Commissioner- General within thirty days of being notified of the tax decision”.
Section 42(8) of Act 915 provides that; “a tax decision to which an objection is not made within thirty days is final.” This means that a taxpayer who fails to exercise their right to object within thirty (30) days of being notified of the tax decision shall be considered to have lost his/her right to object. However, the taxpayer may apply for an extension of time to object to a tax decision, especially when they are unable to object within the thirty (30) days period. Section 42(2) of Act 915 states as follows: “a person may, before the expiration of the 30 days period, apply in writing to the Commissioner-General for an extension of time to file an objection. Where the Commissioner-General is satisfied that there are reasonable grounds for the extension, the Commissioner-General may grant the application for extension and shall serve notice of the decision on the applicant.”
Condition Precedent to Entertain an Objection
The Commissioner-General shall not entertain an objection against a tax decision unless the applicant has, (a) in the case of import duties and taxes, paid all outstanding taxes including the full amount of the tax in dispute; and (b) in the case of other taxes, paid all outstanding taxes including thirty percent of the tax in dispute.
Objection Decision
The GRA makes a tax decision or raises an assessment. Does the taxpayer agree? If yes, the tax decision is final and any payment due is made. If the taxpayer disagrees with a tax decision, then the taxpayer has 30 days to object to the Commissioner- General. The Commissioner- General has 60 days to provide an objection decision. The question, is the taxpayer satisfied with the objection decision? If the taxpayer is satisfied, then the objection decision is final and any amount due is paid. However, if the tax taxpayer disagrees or not satisfied, s/he must appeal to the Independent Tax Appeals Board within 30 days.
Independent Tax Appeals Board
Is the taxpayer satisfied with the decision of the Board? If Yes, the Board’s decision is final and any amount due is paid. If not satisfied, the taxpayer can appeal to the High Court within 30 days. Thereafter, appeals can be made to the Court of Appeal and Supreme Court. Meanwhile, it is worthy to note that the Revenue Administration (Amendment) Act, 2020 (1029) establishes the Appeals Board to hear and determine appeals against decisions of the Commissioner-General with respect to objections to tax decisions under Section 43 of Act 915. The Appeals Board is considered impartial and faster than the court in determining objections to tax decisions.
Strategy During Tax Appeal
A taxpayer must endeavour to manage engagement with the GRA with a professional tone. He must request meetings when needed and avoid (unnecessary) conflict or direct confrontation with the GRA. As a taxpayer or a business, you will rely on evidence and documentation of your tax affairs during an appeal. It is important to keep records (manual or electronic) for at least 6 years with regard to organised invoices, payroll records, contracts & agreements, bank and payment documentation or correspondence with the GRA. You must know your rights during dispute or appeal process. Tax disputes can be resolved amicably without necessarily using the court. However, litigation at the court must be the last resort.
Further Reading:
- Revenue Administration Act, 2016 (Act 915), Section 9, Sections 37-45.
- Revenue Administration (Amendment) Act, 2020 (1029) Fourth Schedule: Establishment of Independent Tax Appeals Board Section 44(1) of Act 915.
BERNARD BEMPONG
Bernard is a Chartered Accountant with over 18 years of professional and industry experience in the Financial Services Sector and Management Consultancy. He is the Managing Partner of J.S Morlu (Ghana), an international consulting firm providing Accounting, Tax, Auditing, IT Solutions, and Business Advisory Services to both private businesses and government.
Our Office is located at Lagos Avenue, East Legon, Accra.
Contact: +233 302 528 977
+233 244 566 092
Website: www.jsmorlu.com.gh
Post Views: 1
Discover more from The Business & Financial Times
Subscribe to get the latest posts sent to your email.
