It said the one per cent profit tax on companies enjoying tax holidays and the method of calculating capital allowances as entrenched in the new income tax law Act 2015(Act896) has the propencity of crippling Ghana’s investment.
The president of the CITG, Mr. Michael Kofi Afful, raised these concerns at a stakeholders forum on the new income tax law.
The forum which brought together tax consultants, tax professionals and accountants was organised by the Ghana Revenue Authority in collaboration with the Ministry of Finance and the Ministry of Communications.
Mr. Afful said there was no country where tax payers were made to pay tax on their profit during tax holidays and therefore, challenged the government to review its decision on the implementation of the new tax.
“Tax holidays are tax holidays and the law knows why those tax holidays were given because if you are into agro-processing for example and want to go into coconut production you need gestation period for about five years because you may incur losses and you need this tax holidays to make room for all these losses,” he said.
“It is not automatic that you will make profit during the tax holidays period therefore tax holidays should remain tax holidays,” he argued.
Mr Afful also expressed dissatisfaction about the method used in calculating capital allowance noting that the new method would not augur well for development hence the old method should be maintained.
“The old method of calculating capital allowance should be maintained instead of introducing the limitations clause which would not augur well for Ghana’s investment,” he said.
Mr. Afful, therefore, called for a review of the new law to address the inconsistencies.
Mr. Anthony Dzadzar, head of Tax Policy at the Ministry of Finance in his remarks however, argued that the new tax comes with some benefits and must be embraced.
He cited the reduction of withholding tax for goods from five per cent to three per cent as some clauses that would increase Ghana’s investment.
The Commissioner-General of the GRA, Mr. George Blankson, described the new tax law as one of the best tax law that would broaden Ghana’s tax revenue.
By Bernard Benghan