Tax amendments need to be treated with urgency so that government does not expose itself to the risk of losing out on much needed revenue, Abdallah Ali-Nakyea, Managing Partner of Ali-Nakyea and Associates, has said.
“Tax issues should be dealt with the much needed urgency because it affects government revenue whiles it affects businesses because it breeds uncertainties that could drive investments out to other areas, so we need that urgency and clarity,” he said.
Speaking in an interview on the sidelines of the Universal Merchant Bank (UMB) tax seminar in Accra, Mr. Ali-Nakyea noted that if Parliament will have to stay on for extended periods of time then that urgency is worth it.
“Tax matters must be treated with urgency because taxation is the lifeblood of government and if you slow down an amendment process then you are going to lose all that revenue and how do you function because workers will come demanding salary and services have to be paid for,” he added.
Capital gains tax impasse
Since the passage of the new Income Tax 2015, which saw the government increase the capital gains tax, investors have lobbied government extensively to scrap the new and increased taxes.
Seeing the move as a setback to an already troubled and wobbly market, investors were up in arms and requested meetings with the government to stop the move, citing the examples of bigger exchanges like the Nairobi and Johannesburg exchanges that do not charge such taxes.
Despite government conceding to the view that the taxes are potential damages to the capital market, these taxes remain in force.
The delay to effect the amendment is what Mr. Ali-Nakyea believes is a danger to the government revenue, businesses and the economy in general.
“I will call for a speedy passage of the amendments. They (investors) have a case and the Ministry of Finance has also listened to them and know that they need to amend certain provisions of the law so we do not lose investors but so far nothing has changed yet and capital gains is still taxed,” he added.
Tax compliance
The tax expert added complaints about excessive taxes are as a result of the non-compliance of the majority of the taxpaying population.
“If all those who are to pay taxes in this country comply by the laws and pay taxes, we can get a system with very low taxes and raise more revenue than we are still raising.”
Supporting his claim with figures, he explained that out of the 6million taxpaying population only 1.5million are paying. “So where are the 4.5million? If 1.5million are contributing so much what if we get everybody to comply?
As long as we do not comply with our tax obligations we are a bit hesitant in calling government to order because of the fear of been asked if you pay and how you do it.
But if we pay, we can all come out and challenge government properly with our tax clearance certificates and demand better services.”
Technology in taxation
He noted that taxation can be improved with technology.
“Looking at how we are now able to easily transfer money to our friends and families and business associations without any hustle over mobile money, why can’t we transfer that to the revenue authority? It should be possible. We need to develop to that extent to make it easy.”