Government has suspended the collection of the one percent tax on interest earned by individuals.
The one percent tax was proposed following the implementation of the new income tax law by the GRA to replace the repealed Internal Revenue Act (Act 592) which took effect on January 01, 2015.
This meant that all interest paid to an individual – interest accrued on treasury bills, fixed income deposit, interest from banks and many others will attract a one percent tax.
Also, interests paid to individual unit trust or mutual fund holders was also to be taxed.
Players in the investment sector did not take the impending imposition lightly. They warned against the move, saying it could seriously affect the savings culture in the industry which is already struggling to attract people.
The GRA has however issued a statement indicating it has suspended the tax.
The statement said “we wish to bring to the attention that government has submitted proposals to Parliament for amendment of the relevant sections of the Income Tax Act 2015 (Act 896) to reverse the imposition of 1 percent withholding tax on interest earned by individuals.
“In this regard, financial institutions are directed to suspend the imposition of 1 percent withholding tax on interest earned by individuals,” the statement added.
Source: myjoyonline