The Akufo-Addo administration has announced the implementation of a tax threshold to protect workers on minimum wage as part of its major tax reforms in the 2018 budget.
This means income tax for minimum wage earners has essentially been abolished.
The government has long served notice of its intent to lessen taxation, and the relief being offered to workers on minimum wage is to ensure fairness in income tax administration.
The Government will review the income tax threshold by “pegging the tax-free threshold to the current minimum wage,” Finance Minister Ken Ofori Atta announced in Parliament as he delivered the budget statement.
The minimum wage currently stands at GHc9.68 cedis, up from GHc 8.80, after the most recent increase in July 2017, set to take effect in January 2018.
Relief for private universities
Tax relief has also been given to other section of society with private universities set to benefit from yet to be announced breaks.
“It is government’s intention to support the sector in order to position Ghana as the premier higher education hub of the sub-region and to attract critical foreign direct investment into the sector,” Mr. Ofori Atta said.
The reliefs may, however appear to be contingent on the eventual use of the profits, according to the Finance Minister’s choice of words.
“For the long-term development of a local human capital base for a changing world, we will grant relief for corporate income tax paid by privately owned managed universities to the extent that profits are ploughed back to expand or maintain facilities,” he noted.
Tax holidays for young entrepreneurs
As part of the governments attempts to bolster young entrepreneurs, categorized into ages 35 and below, it will, through the National Entrepreneurship and Innovation Plan grant tax holidays based on the number of persons employed by start-ups or early stage businesses.”
“A preferential tax rate of between 3 to 5 years will be granted after the tax holiday. They will also be allowed to carry forward losses for five years,” the Finance Minister announced.
Special Import Levy to stay
The National Fiscal Stabilization Levy and the Special Import Levy will be extended to the end of 2019.
The Special Import Levy, which was introduced in 2017 by the previous government, received huge backlash from importers who described it as a nuisance tax.
The National Fiscal Stabilization Levy is imposed on Non-Bank Financial Institutions, Insurance companies, Telecommunications companies, maritime and airport terminals, among others.
- The 7.5 percent income tax on the commission of lotto marketing companies will be abolished along with the 5 percent withholding tax on lotto prizes.
- The government will introduce voluntary disclosure procedures (VDP) in the revenue administration act, 2016 (Act 915) to waive penalties on voluntary disclosures and payment of unreported and understated taxes by tax payers. Tax payers will be required to arrange to pay such taxes withinperiodiod agreed with the Ghana Revenue Authority.
- In 2018, amnesty will be sought from Parliament to exempt taxpayers who register and file returns, within a targeted period, from paying penalties and interest for late or non-submissions of returns and late payments. This will also include exemption from prosecution.
- Alternative Dispute Resolution Mechanisms will be introduced to resolve tax disputes “in order to instill confidence in investors.”
By: Delali Adogla-Bessa/citifmonline.com/Ghana
Published on 2017-11-15 12:47:03 at Source