Public Agenda (Accra)
Basiru Adam
8 September 2008
Accra — The Internal Revue Agency (IRS), The Customs, Excise and Preventive Service (CEPS) and the VAT Service are the three main national revue agencies in the country.
The three agencies collect taxes on behalf of the nation and also undertake audits of companies operating in the country.
Captains of industry, who pay the taxes, have said that to ensure an effective and efficient tax administration system in the country and save them having to be audited by all three, the tax bodies must be unified.
They say there is the need for the integration of the activities of these bodies "via a common shared database" and "from one central office." " A functional based approach would reduce the number of audits as one audit would cover all types of tax and also enable tax payers offset different taxes against each other e.g. VAT credits against income tax liabilities. This would also benefit the government as they would not need to consider the issuing of large refunds to taxpayers."
The recommendation is contained in a proposal put together by PricewaterhouseCoopers (PwC), a research organization, to be included in the AGI policy document to be submitted to government.
Presenting the proposal to members of the AGI in Accra, Mr. Charles Egan, a Senior Partner at PricewaterhouseCoopers said except for the Large Tax Payers Unit, the various tax agencies operate separately, which results in multiple tax audits and assessments that inconvenience tax payers.
There is therefore the need to bring the three bodies together so that a Commissioner General would be appointed to oversee their activities.
It is also hoped the integration would help widen the tax net by capturing unregistered tax payers.
In the short term though, the proposal noted, the district offices of the IRS need to be computerized to improve the quality of services provided. "Computerization would ensure that both the tax payers and the IRS officials agree on tax positions."
The proposal also calls for the elimination of withholding taxes for local manufacturers in that they deter companies and individuals from entering the tax net. "The abolition of withholding taxes for local manufacturers would eliminate the administrative burdens that exist in the withholding tax system and also contribute towards the willingness of taxpayers to come within the tax net."
Equally, the proposal noted that pre-production taxes like VAT and import duties imposed on imports of raw materials must be done away with to give local manufacturers a competitive edge. "These duties present an additional tax and cash flow burden to local manufacturers as well as giving them an unfair playing field since they have to compete with Free Zone entities, which are exempt from these duties in the local markets." Instead, the manufacturers could be made to pay "output VAT after processing their raw materials into finished goods."
Several members of the AGI, including Robert Palitz of KASAPA Telecom added their voice to the recommendations. In his view, the problem of companies having to respond to different government agencies on the same issue does not rest with the three revenue agencies alone. He said his company has had to respond to several other government agencies on issues they could have gotten from each other. "The sharing of information among government agencies is virtually nil. This is inside and outside the tax issue."
The president of the AGI, Anthony Oteng Gyasi emphasized the need for a unification of the country's tax regime, saying "if we keep tinkering with the system we are not going to achieve dramatic new results.
The occasion was also used to honour some companies for sponsoring the printing of the latest edition of the association's Business Climate Survey, which the president said had gained international recognition. He said the World Bank and co have found it a useful reference material in taking decisions on Ghana.
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