Tax expert advocates reduction in witholding tax rate

September 4, 2008 pg 50

Story: Musah Yahaya Jafaru
GOVERNMENT has been urged to reduce the five per cent withholding tax rate on local goods and services to about three per cent to encourage the growth of small businesses in the country.
Mr George Ohene Kwatia, a tax expert working with PricewaterhouseCoopers, who made the call, said the reduction of the withholding tax rates would improve compliance in the payment of withholding tax, widen tax net and increase tax revenues.
He was speaking in Accra on Tuesday at a tax seminar organised by the Chartered Institute of Taxation.
Mr Kwatia said sole proprietorships, including property owners would also be more willing to pay their fair share of taxes.
Besides, he said, the reduction of the withholding tax rates would “increase capacity for various tax offices to manage the tax credit regime efficiently and reduce bureaucracy for both the Internal Revenue Service (IRS) and companies”.
Mr Kwatia said companies should be permitted to remit on an instalment basis to ensure they have control over amounts paid, and asked for withholding tax certificates to be issued by customers to suppliers on local goods and services.
The Chief Consultant of Nakyea Consult, a tax and corporate advisory services firm, Mr Ali-Nakyea Abdallah, noted that the provisions of the Internal Revenue Regulations, 2001 (Legislative Instrument (L.I.) 1675) provides adequate incentives with respect to donations, sponsorships and contributions to assist corporate bodies to be able to balance their bottomline concerns and social responsibility.
However, he said, the issue that remained was for the relevant government ministries that are in a position to recognise and approve the donations, sponsorships and contributions of corporate bodies, to assist such corporate bodies by liaising with the Commissioner of IRS.
That, Mr Abdallah said, was the surest way corporate bodies could also through these allowable deductions continue to be socially responsible to contribute to the growth and development of the country.