The Minister of Finance and Economic Planning (MoFEP), Mr. Seth Terkper has said government’s decision to introduce the new income tax (Act 896), was a strategic fiscal tool to widen the tax base and curb tax base erosion.
According to the finance minister, the income tax law, which included the stabilisation levy and special import levy were all fiscal policies introduced to correct the revenue deficit, which was running the economy down.
“The Act 896 was to address losses in tax revenue, consolidate the various income tax laws as well as facilitate the application and use of these laws to reduce huge budget deficit,” he said.
Mr. Terkper was speaking at a forum in Accra on the theme, “The new tax law; its implications for the economy and businesses”.
The forum afforded stakeholders the opportunity to deliberate on the implications of the Income Tax Act, 2015 (Act 896), on businesses and the economy in general.
The income tax law, which came to effect on January 1, this year, replaced the Internal Revenue Act, 2000 (Act 592), which had been criticised for failing to consolidate the country’s tax laws since its introduction.
He said the law was important to promote tax compliance mechanism, which increased the overall tax revenue of the country.
The finance minister noted that government was committed to reviewing the law on the back of economic gains made by the country.
Abdallah Ali- Nakyea, Tax Consultant and Managing Partner of Ali-Nakyea & Associates said the new income tax law sought to create an enabling environment for recovery and growth of business in the face of losses through the carry- forward payment of tax provision for 3 and 5 years in general businesses and specialised industry respectively.
He said the law has provided a worldwide tax source base for the country stressing also that it was beneficial for businesses which hold an interest to diversify into other businesses without facing the impact of the withholding tax provision.
Professor K. B. Omane Antwi, Board Chairman of Graphic Communications Group Limited and Chairman of the forum called on government to pay attention to efficient tax collection system which would contribute massively to increased tax revenue.
“This would ensure large revenue for government to pursue its developmental agenda,” he added.
By Claude Nyarko Adams