Parliament last Wednesday passed the Income Tax (Amendment) Bill, 2016. The passage gives legal backing to the decision of the Ghana Revenue Authority (GRA) to suspend the collection of the one per cent withholding tax.
The Income Tax Act 2015, which was passed by Parliament and assented to by President John Mahama on September 1, 2015, was to have come into effect on January 1, 2016.
Under the act, any interest accrued on treasury bills, fixed income deposit, interest from banks, among others, will attract a tax of one per cent. Following public uproar against the tax, the GRA directed all financial institutions to suspend its imposition.
A ranking member of the Finance Committee of Parliament, Dr Anthony Akoto-Osei, raised the issue in Parliament two weeks ago, pointing out that the GRA had no authority to suspend the act.
The Speaker of Parliament, Mr Edward Doe Adjaho, supported the position of Dr Akoto-Osei’s position and reiterated that the GRA had no authority to suspend the Income Tax Act that had been passed by Parliament.
He said until such an act was amended by Parliament, it remained in force.
A day after the GRA’s action had been challenged, the Minister of Finance, Mr Seth Terkper, laid a bill before Parliament to amend the Income Tax Act 2015, (Act 896).
Mr Doe Adjaho referred the bill to the Finance Committee of Parliament for consideration and delivery of a report to the House.
After the presentation of the report of the Finance Committee of Parliament on the bill last Wednesday, the minority, led by Papa Owusu Ankomah, The Member of Parliament for Sekondi, made some preliminary objections.
He said the government’s decision to charge the one per cent tax on interest accrued on investment was ill-informed.
He said further that the GRA, and by extension the President, had engaged in unconstitutionality by suspending the implementation of the act.
But a deputy Minister of Finance, Mr Cassiel Ato Forson, said the GRA did not suspend the act, but rather the one per cent charged on individual’s interest.