The Chartered Institute of Taxation Ghana has educated members of the major professional accounting bodies in Ghana on issues of withholding taxes on Thursday, December 14, 2023.
CITG is mandated under the Chartered Institute of Taxation Act, 2016 (Act 916) to promote the study of taxation and regulate the practice of taxation in Ghana.
Themed “Navigating the Nuances of Withholding Taxes in Ghana,” the webinar brought together members and other professionals of the Chartered Institute of Taxation Ghana (CITG), the Institute of Chartered Accountants Ghana (ICAG), the Association of Chartered Certified Accountants (ACCA), and the Chartered Institute of Management Accountants (CIMA), the first of such a collaborative programme.
In his call to order for the commencement of the programme, Dr. Frank Yao Gbadago indicated to the 1,195 participants, who had joined in, that the joint CPD is part of CITG’s commitment to tax education and knowledge sharing to promote professional development and inform taxpayers and the public towards improved voluntary tax compliance. Accordingly, he expressed his excitement to have the participants in the CITG, ICAG, ACCA, and CIMA joint CPD event.
Dr. Gbadago revealed that he had assembled experts from the Institute who are also members of the other participating institutions, while anticipating their enormous participation and meaningful insights.
After Dr. Gbadago’s introductory remarks, Vice President of CITG, Ernestina Christina Appiah, offered the opening prayers.
In his welcoming remarks, the President of the CITG, George Ohene Kwatia, acknowledged the presence of dignitaries and participants, emphasising the importance of the webinar to their professional developments.
He recounted discussions with the ICAG on possible areas of collaboration, particularly in the area of withholding taxes.
Mr. Kwatia observed that despite the significant influence withholding taxes has on the revenue of the government, it is one of the most tricky yet overlooked areas by taxpayers, adding that it has a considerable impact on cash flows and profitability for taxpayers, which ultimately affects the net or disposable incomes of entities and individuals.
“Today we convene not only to acknowledge the complexities associated with withholding taxes but also to investigate them together. Failing to withhold taxes carries weighty consequences, such as penalties and interest charges by the GRA,” Mr. Kwatia said.
“Our mission here is clear. To foster knowledge and present solutions for managing withholding taxes and related liabilities,” he added.
He thanked the leadership of the collaborating professional bodies for accepting to be part of the webinar.
Chairman of the CITG Council, Emmanuel Obeng Asiedu, remarked that the webinar “marked a significant step in fostering knowledge sharing and professional development.”.
He also recognised the critical role withholding taxes play in transactions and business activities, indicating that the 2-hour session will provide a platform for participants for interactive learning and valuable networking.
“Together, we aim to broaden the horizons of knowledge and expertise, enhancing the proficiency of professionals engaged in withholding tax obligations,” Mr. Asiedu said.
The president of ICAG, Sena Dake, expressed gratitude to the CITG for collaborating with hers.
She stated that the webinar fit into ICAG’s financial literacy programmes, which seek to enrich more professionals with learning and create more opportunities to share insights and exchange ideas.
She underscored the need for taxpayers to keep accurate records as the first step in navigating the withholding tax landscape.
“Our records are sometimes the problem we have. Records for income expenses and deductions are those that, when we are not doing them well, can bring us the penalties and sanctions that come along with taxation,” she said.
Madam Dake also encouraged participants to support the government’s drive for economic growth through effective taxation practices.
The Managing Partner of Ikern & Associates, who was also the lead presenter for the webinar, Dr. Isaac Nyame, explained withholding tax as a form of tax imposed on income at source.
He provided an overview of recent updates and changes in withholding taxes and other related obligations, including changes in the Income Tax Amendment Act 2023 (Act 1094) whose purpose is to add an additional tax bracket of 35% for persons earning income exceeding GHC 600,000 per annum, impose a tax of 25% for non-resident persons, impose a withholding tax on the realisation of assets at 3% and 10% for residents and non-residents, respectively, and introduce a requirement to file returns on the realisation of assets and liabilities.
Other changes, Dr. Nyame listed include the increase in the withholding tax on bet winnings from 5% to 10%, imposition of 20% on the gross revenue of betting or gaming companies, increase in the income tax rate from concessions from 1% to 5%, increase in the elective tax rate of gifts and gains from from 15% to 20%, changes in the treatment of unbeliever losses for period of 5 years, imposition of income tax on persons declaring losses for 5 consecutive years (which tax calculated on 5% of the persons turnover), changes in the treatment of exchange losses and changes in determining control in relation to related parties, and the reduction in the withholding tax on unprocessed minerals from 3% to 1.5%.
Dr. Nyame highlighted certain challenges withholding agents encounter in performing their obligations, including withholding tax as a resident entity for goods, services, or works supplied by a non-resident entity, the impracticality of withholding tax from individuals and entities in the informal sector, and the bulking of transactions beyond the maximum threshold of GHC 2,000 during a tax audit.
In addition, he observed the net fee requirements for resident or non-resident persons as opposed to the grossing up of the same and the obtaining of TCC from the tax payer portal, where outstanding issues are not considered during migration, as other potent challenges.
The Head of Audit at the Ghana Revenue Authority, Dr. Martin Kolbil Yamborigya, advised withholding tax agents to arrange the tax affairs of their businesses properly in order not to incur excessive liabilities arising from tax audits.
Dr. Yamborigya noted that withholding taxes is one of the most important revenue sources for the government, hence the need for taxpayers to comply.
“As a taxpayer, you should arrange your tax affairs so that you will be able to comply with the tax laws.”
“Once the law says that you must withhold, you should be able to arrange your tax affairs in a way that you can pay,” Dr. Yamborigya said.
Dr. Yambomgyari said that it is important that withholding agents do not put themselves in positions where they avoid tax only for them to be penalised during tax audits.
Dr. Nyame and Dr. Yambomgyari responded to some questions from participants at the workshop.
Dr. Yambomgyari explained that for NSS personnel, any amount paid beyond the approved rate by the Secretariat will be subject to PAYE tax.
For direct payments via online channels to non-residents for certain services, e.g., software licences, Dr. Yambomgyari explained that the withholding agent may need to gross up the actual amount paid to the vendor and bear the withholding tax expenses. However, he observed that this may pose another challenge: reducing the chargeable income of the withholding agent. He also recommended that taxpayers inform their non-resident vendors that the contract they are entering into demands that they deduct an amount as withholding tax to be paid to local revenue authorities.
“Let us remember that if you are going to consider the mode of tax payment, people will always use that as an excuse,” he stated.
For transactions with the informal sector, Dr. Yamborigya stated that although there is a limitation in how the GRA is resolving this issue, he encouraged withholding agents not to abuse the system by conducting business only with those in the informal sector. He added that with them, those in the informal sector will be roped into the tax bracket using their TIN, and there will be little room for tax avoidance.
In the case of per diems, Dr. Nyame advised tax payers to satisfy themselves about whether the per diems paid are strictly for the purposes of conducting the business of the taxpayer and can be accounted for. Besides that, he revealed, they are to be treated as allowances with the relevant taxes applied.
For her part, Associate Director of Tax Services at PwC Ghana, Mary Kwarteng Darko, admonished organisations, including NGOs, to prepare themselves for tax audits by ensuring all adequate documentation is organised prior to the audit.
Madam Darko also tasked the organisation with ensuring there are sufficient explanations and resolutions for all issues raised during the draft stage of the tax audit, but not waiting until after the audit when an assessment is given.
“Once an assessment is issued, there are very strict rules to be followed before a resolution can even start,” she said.
The joint CPD ended with a prayer from Ken Amoah, who is a Senior Manager at the Tax Unit of EY Ghana.
It was moderated by Dr. Frank Yao Gbadago, Registrar of CITG and Senior Lecturer at Akenten Appiah-Menka University of Skills Training and Entrepreneurial Development (AAMUSTED), and Ken Amoah.
