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THE TAX AMNESTY ACT 2017: AN OPPORTUNITY FOR TAX HONESTY IN GHANA January 2018 B. Boatema Boateng1 Introduction A myriad reasons account for the failure of businesses to meet their tax obligations in Ghana. These reasons include financial hardship, ignorance of tax laws, and sheer recalcitrance. Many of the businesses falling in these categories desire to come clean. However, the enormity of their tax liabilities and the fear of criminal prosecution prevent them from approaching the Ghana Revenue Authority (the “GRA”). It is for this reason that the Parliament of Ghana passed the Tax Amnesty Act 2017, Act 955 (the “Tax Amnesty Act”). The Tax Amnesty Act seeks to offer repentant businesses an opportunity to wipe their tax slates clean. The focus of this article is to shed some light on the Tax Amnesty Act and how businesses can take advantage of it. Part I provides a detailed description of the nature of the tax amnesty; Part II provides the eligibility criteria under the Tax Amnesty Act; and Part III outlines the application procedure for interested business entities.

Part I

1. Nature of the Tax Amnesty Generally, tax amnesty is a forgiveness of tax obligations by a government for repentant tax defaulters. The forgiveness of tax obligations ranges from a reduction in the payment of actual taxes owed, a complete exemption from the payment of taxes for a target period to freedom from criminal prosecution. The Tax Amnesty Act offers tax pardon to two (2) categories of tax defaulters: persons not registered with the GRA; and persons registered with the GRA, who have failed to either file tax returns or pay taxes in accordance with the tax laws of Ghana. 1.1 Pardon for Failure to Register with the GRA The Tax Amnesty Act seeks to forgive the tax obligations of repentant business entities, which have failed to register with the GRA.2

1B. Boatema Boateng is a Partner at Ark Legal Consult; She was previously an Associate at Bentsi-Enchill, Letsa & Ankomah and Lexkudoz Law; She is the founder of Empower Ghana, an NGO, which seeks to promote sustainable development in Ghana; She is a graduate of the Ghana School of Law and the University of Ghana, Faculty of Law; and she is a product of Wesley Girls High School. 2 Tax Amnesty Act 2017, Act 955, section 1.

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Ordinarily, all business entities, which are subject to income tax, are required to register with the GRA, before engaging in any business in Ghana.3 A business entity which fails to register with the GRA and its defaulting manager(s),4 will be liable on summary conviction to pay the tax due in addition to a fine of either twice the tax amount due or GHS 12,000.00 (whichever is higher).5 Further, the Commissioner-General may authorize the forfeiture of any goods or materials used by the entity in carrying on its business.6 By the Tax Amnesty Act, an interested business entity may avoid the payment of taxes, penalties and interests incurred for failing to register with the GRA. The Tax Amnesty Act seeks to pardon defaulting business entities for previous years including and up to the 2017 year of assessment. A business entity seeking to benefit from the amnesty for failure to register, is required to register with the GRA and file income tax returns for the 2014 to 2016 years of assessment by September 30, 2018.7 1.2 Pardon for Failure to File Tax Returns or Pay Taxes The Tax Amnesty Act also seeks to forgive the penalties and interests of persons duly registered with the GRA, yet who have failed to file returns or make tax payments in accordance with the Income Tax Act 2015, Act 896, (the “Income Tax Act”).8 The Income Tax Act requires all business entities to file their returns of income with the GRA in respect of each year of assessment not later than four (4) months after its financial year.9 A business entity which fails to file income returns and its defaulting manager(s) will be liable to a fine of GHS 500 and an additional GHS10 for each day the default continues.10Further, the Commissioner General may prosecute an entity which fails to file its income returns, four (4) months after the imposition of the penalty for non-submission, in addition to the penalty imposed.11 Failure to pay taxes is an offence in Ghana.12 A business entity which fails to pay taxes by the due date will be liable on summary conviction to a maximum fine of GHS 12,000.00 or a term of imprisonment not exceeding one (1) year in addition to the payment of the outstanding amount.13 3 Internal Revenue (Registration of Business) Act, 2005, Act 684, section 1(1). 4 By section 133 of the Income Tax Act, a manager of an entity is a councillor, director, manager, member, officer or other person who participates or may participate, whether alone or jointly with other persons, in making senior management decisions on behalf of the entity including a partner of a partnership and a trustee of a trust; a person treated as a manager of an entity by another tax law; a person in accordance with whose directions and instructions the entity or a person described in the rest of this definition is required or accustomed to act; and a non-resident person with respect to a Ghanaian permanent establishment. 5Revenue Administration Act, 2016, Act 915, (the “Revenue Administration Act”) section 79(1). 6Ibid., section 79(2). 7 Tax Amnesty Act 2017, Act 955, section 1. 8 Ibid., section 2. 9 Income Tax Act 2015, Act 896, section 124. 10 Revenue Administration Act, section 73(1). 11 Ibid., section 73(4). 12Income Tax Act, Seventh Schedule, paragraph 56; and Revenue Administration Act, section 80. 13 Income Tax Act, Seventh Schedule, paragraph 56.

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Further, the Income Tax Act mandates the GRA to treat all taxes due and payable from businesses as debts.14As a debt due to the GRA, the Commissioner-General is empowered to calculate interests at one hundred and twenty-five percent (125%) of the statutory rate, compounded monthly, and applied to the outstanding amount.15 The powers of the Commissioner-General relating to tax recoveries include instituting court action16 and distress proceedings17 against defaulting entities as well as recovery from agents of non-residents18 and from third parties owing the defaulting entity.19 Regardless of the gravity of the above offences, the Tax Amnesty Act is offering interested businesses which have either failed to either file income returns or pay their taxes due, the opportunity to pay the outstanding amount due without any penalty or interests. A business entity seeking to benefit from the amnesty for failure to file income returns or failure to pay taxes due, is required to file income returns or amended returns, fully disclosing all previously undisclosed liability up to the 2017 year of assessment by September 30, 201820 and pay all assessed and outstanding taxes.21 A business entity which takes advantage of the amnesty will enjoy the freedom from paying penalties and interests accrued from previous years including and up to the 2017 year of assessment. 1.3 DURATION OF TAX AMNESTY The tax amnesty will be for nine (9) months (from January 1, 2018 to September 30, 2018). Interested business entities may apply to the GRA, on or before September 30, 2018.

PART II 2. Eligibility for the Tax Amnesty 2.1 Interested business entities that qualify to apply for the tax amnesty include: (a) businesses who are not currently registered with the GRA; and (b) businesses which are currently registered with the GRA, yet who have failed to either file income returns or are in arrears for the filing of income returns. Interested businesses which have failed to make tax payments are not qualified to apply for the tax amnesty if the tax payable:

14Income Tax Act, Seventh Schedule, paragraph 40(1).15 Ibid., paragraph 50(2); and Revenue Administration Act, section 71(2).16Ibid., paragraph 40(2).17Ibid., paragraph 41.18 Ibid., paragraph 47. 19Ibid., paragraph 43.20Tax Amnesty Act, section 2(a). 21Ibid., section 2(b).

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(a) has been assessed in respect of the tax or any matter relating to the tax;22 (b) is under audit, investigation relating to undisclosed income or any matter relating to undisclosed income, unless the interested entity makes a full disclosure and pays the accrued liabilities before the conclusion of the audit or investigation; or (c) has been notified by the Commissioner-General or the authorized agent of the Commissioner-General of an enforcement action relating to the failure to comply with any tax law in Ghana, unless the entity files the requisite returns or makes immediate payments of any taxes assessed or due.

PART III 3. How to apply for the Tax Amnesty? The Tax Amnesty Act requires qualified business entities to apply to the Commissioner-General in a prescribed form with requisite supporting documents on or before August 31, 2018.23 A business entity, which has not yet registered with the GRA, yet is seeking to benefit from the tax amnesty, is required to inquire at the nearest GRA office for registration and application for the amnesty. Further, businesses, registered with the GRA, who want to benefit from the tax amnesty are required to apply at the tax office, where they are registered. Conclusion Taxes matter. Businesses matter. The amnesty program is an opportunity for defaulting businesses to make things right. In addition to the financial benefit of the amnesty to business entities, the Government of Ghana intends to wage an intense campaign to prosecute tax defaulters and offenders after the amnesty period.24 Affected business entities are encouraged to take advantage of the tax amnesty offered by the Government of Ghana to prevent prosecution which may result in the payment of penalties, interests, fines and/or imprisonment. 22Ibid., section 3 (2)(a).23Tax Amnesty Act, section 4(1)(a). 24Memorandum to the Tax Amnesty Act, para. 1, page 2.

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