President of the Chartered Institute of Taxation Ghana Mike Kofi Afflu is accusing Metropolitan, Municipal and District Assemblies (MMDAs) of committing an illegality by collecting Registration of Business fees from small and medium scale enterprises in the country.
Various MMDAs including the Accra Metropolitan Assembly have departments for this purpose. Personnel from the department and the assembly’s security team would usually visit various businesses to collect this fee. They would usually lock up the shop if business operators do not pay.
Mr. Kofi Afflu says the MMDAs are not supposed to collect Registration of Business fees from business operators because it’s rather the work of the Ghana Revenue Authority per a 2005 amendment of the Internal Revenue Act 2005 (Act 684).
He also claims Ghana’s 17.5 % VAT rate is too high in comparism with neighbouring countries like Nigeria whose tax rate stands at 5%, thus making their business environments more friendly and favorable than Ghana.
He accuses government of hiding under the “increasing revenue generation” mantra to short change business operators instead of widening the tax net to capture those who do not pay taxes.
The tax consultant says the rights of most business operators in the country have been infringed upon because of ignorance, thus giving the MMDAs the opportunity to abuse their rights.
“In this part of the world, issues relating to taxes are perceived as something for the government and tax collection agencies. Members of the public shy away from their responsibility of paying taxes because of the wrong notion that taxes are punitive and a burden on them. Lack of education on the tax systems and administration partly accounts for this,” he said.
Mr. Kofi Afflu made this disclosure while addressing some selected small and medium scale entrepreneurs at a workshop organised by the Level 400 Development Communication Students of the African University College of Communication at Adabraka here in Accra.
Mr. Afful who is also president of the West African Union of Tax Institutes is advising government to contract private audit firms to help in the internal revenue generation process. He says this has become necessary because information available to him indicates that government auditors are in bed with some officials of the MMDA’s and Ghana Revenue Authority, who are condoning and conniving to loot taxes paid to government.
Speaking in an interview with this reporter, the tax consultant claimed the introduction of the gift tax in the country in 1975 by government is useless. The tax is collected from individuals who receive gifts from others. The PNDC Decree 348 first introduced the tax, but the law has been reviewed as reflected in Act 592. Per the law, gifts received which are valued above 500 cedis in current terms attract a 5% tax.
The country, according to the tax consultant, has many wonderful statutes but little education has been done on them for the benefit of the public, thus rendering their existence and implementation ineffective and inefficient. He says Act 671 (VAT Amendment Law 2004), the Taxpayers Identification Numbering System Act and (Customs and Excise Duties and Other Taxes Act 565, 1999) are among the best in the world.
Mr. Mike Kofi Afful used the opportunity to call on government to engage professionals in the revenue generation process instead of relying on government officials in the civil service, who he claims are corrupt and tend to place their personal interests above government’s interest.
