The Legislative Advocacy Group working on the review of the draft Tax Exemptions Bill (2021) has come out with strong recommendations for consideration into the proposed amendment of the document which is currently before Parliament. The Bill when passed will regulate the application of tax and other exemptions and provide for related matters.
The group made up of representatives from the Tax Justice Coalition (TJC), Parliamentary Network Africa (PNAfrica) and the Ghana Anti-Corruption Coalition (GACC) made the recommendations in its final working policy document issued recently in Accra and copied to the media.
According to the Group, even though the Tax Exemptions Bill (2021) answers majority of the concerns of the citizenry and the Tax Justice Fraternity, further inputs can potentially strengthen when it is finally passed by Parliament.
The Working Group has therefore made the following recommendations to Section (5) of the proposed amendments under general responsibility, thus:
The Tax Exemptions Bill should include a requirement that the tax incentive regime be underpinned by clear, transparent and credible legal, technical and political processes to deter rent-seeking behaviors that grant tax breaks purely for private gains. Transparency through a beneficial ownership information should serve as an additional pre-requisite for the granting of exemptions as a safeguard measure. This will help to identify the actual beneficiaries of the exemptions, including those responsible and granting the exemptions to themselves.
Under Sub- section (3) of the bill which states that:
“Where required in (2), the beneficial owner (BO) in line with the Company’s Act 2019 (Act 992) shall be ascertained in the grating of such exemptions” the Group proposed that the Bill should require that tax incentives are properly negotiated and not permit blanket provisions where all the tax handles are zero-rated irrespective of the policy implications. The government should be able to retain or exclude some specific taxes and levies such as the Ghana Education Trust Fund (GETFUND) levy and the National Health Insurance levy (NHIL) from some of the exemptions. This it believes will give the Government some leverage and additional revenue. “The section 16 of the Bill should be amended or supported with Regulations to provide for this recommendation:” it added.
Per the working policy document, the Coalition further made proposed amendments to Section16 of the Bill: Under General Tax Incentives which says,
“Unless for concessional, Government procurement and diplomatic exemptions, where customs duties and customs taxes are to be exempted or zero-rated, NHIS and GETFUND Levies shall stand and not be varied as prescribed by the tax provisions” the Group proposed that “Omnibus exemptions to the President and the Presidency can easily be abused by third parties such as party supporters, friends and family. It is therefore necessary that the Bill is more specific on the President and should provide that only one or specified officer(s) can apply for exemptions on behalf of the President or the Presidency. This requirement should equally apply to emergency and security operations which also need serious checking and inspections”.
The Group also proposed amendments to Section 9 of the bill which captures Privileged Persons including the President, some Ministers, Diplomats, Religious Groups etc, and recommended that “The Ministry shall issue written guidelines published in the Ministry’s website on the modalities for the vetting and granting of exemptions those captured in the privileged Persons.
The document also noted that the objective of Section 12 of the Bill which provides for religious organizations must be reconsidered. It added that if the idea is that religious bodies should produce items mentioned in the provisions locally in five years’ time, it is perhaps not tenable because these items have associated religious myths or value depending on where they come from. “For example, “Zamzam” from Mecca has a special mythical value and cannot be locally produced”
Hence, the Advocacy Working Group is proposing that the “Section 12 (3), and the exemption under subsection (1) which is applicable for up to five years after the entry into force of this Act.” must be reconsidered in the light of its objective.
The Group believes that the government’s revenue mobilization strategies through the digitization programmes; TIN registration, Revenue Assurance and Compliance Enforcement (RACE), among others, though excellent would not result in the kind of revenues envisaged without managing and curtailing tax exemptions as a priority. “Tax exemptions are assured revenues, and should be accounted for through a comprehensive management under an Exemptions Law” the document concluded.