Introduction
We conducted two surveys weeks ago on tax law amendments and how individuals and businesses respond to these changes. The results of the survey show that many businesses are quite slow in responding to tax law changes.
What could be the cause? Is it that they do not have sufficient information to act immediately and appropriately? Is it that the Regulator is sometimes slow in circulating notices and guides concerning how and when these laws should be implemented?
Regardless of the cause, here are a few tips to proactively implement changes in tax laws
Prior information to enable you act
In most jurisdictions, Government’s Budget Statement gives the “Warning Shot.” Government’s Budget Statement reflects government’s policy objectives. These policy objectives cover fiscal policies which bother on taxation. In Ghana for instance, a budget statements for a new year, (say 2021), is presented to Parliament in November of the previous year, (i.e. November 2020). A mid-year budget review statement is then presented to Parliament in July of the new year (i.e. July 2021). Significant fiscal policy considerations are found in these budgets. Often, going through the comprehensive budget statement requires much time. So, you could fall on the Budget Highlights for summaries. When reading the budget highlights, look out for “ Fiscal Policy Initiatives”.
Government’s fiscal policy objectives usually focus on tax incentives or concessions which are meant to stimulate investments in specific sectors of the economy, create employment opportunities and enhance business growth.
On the flip side, the policy objectives could also lead to: The imposition of new taxes (like the contentious E-Levy); expansion of the tax net (i.e. getting more people, especially in the informal sector to pay taxes); Scrapping off existing tax incentives (like the benchmark value discounts) or an upward adjustment to existing tax rates (like the increase in the communication service tax rates from 6% to 9% in 2019 under Amendment Act 998). These are done to finance government’s spending.
In effect, once government’s budget is read, you should start “warming up” to implement any changes relevant to your operations.
Acts and Amendment Acts
Fiscal Policies in budgets have legal implications. Where proposed fiscal policies lead to new taxes, parliament will pass a new law (Act). Where proposed fiscal policies lead to changes in existing tax regime or laws, Parliament will pass a law to cause that change (Amendment Act). These laws must be given presidential assent. After that, an effective date will be announced. The effective date is the date policy-makers expect you to start acting on the laws. Visit the website of Parliament often, follow the news, check the Ghana Revenue Authority’s website often or contact the Assembly Press (Ghana Publishing Company) to check if the laws are available and what their effective dates are.
The Commissioner’s Practice Notes/ Guides
The Commissioner-General of the Ghana Revenue Authority (GRA) is given the mandate by law to release practice notes to throw more light on how tax laws are to be implemented. These practice notes can be found on GRA’s website. Visit the GRA’s website often for updates and newsletters.
A clue to effective dates
Effective dates are usually not far from the date the laws are given presidential assent. We have sampled below some tax laws with their respective date of assent and effective dates. This should give you an indication of when you should start implementing these changes;
Law | When was Presidential Assent Given? | When did the law become effective? |
Covid-19 Health Recovery Levy Act, 2021 (Act 1068) | 31st March 2021 | 1st April 2021 |
Penalty and Interest Waiver Act, 2021 (Act 1065) | 31st March 2021 | 1st April 2021 |
Financial Sector Recovery Levy Act, 2021 (Act 1067) | 31st March 2021 | 1st April 2021 |
VAT (Amendment) Act, 2021 (Act 1072) | 30th December 2021 | 1st January 2022 |
VAT (Amendment) Act, 2021 (Act 1072) | 30th December 2021 | 1st January 2022 |
How can we help you?
The business regulatory environment is quite dynamic. Trying to monitor that in addition to other tasks on a daily basis can be time-consuming and involving. It is therefore important to get a consultant who is specialized in monitoring these changes and its implications for your business.
Consultants also have a wider reach in terms of their contact with regulatory bodies and resources they can fall on to give you relevant and timely advice. Their rich knowledge and experience also makes it easy to understand and adapt to changes in laws than the average person.
Conclusion
Being proactive is the best way to avoid problems. So, follow the tips above and you will have it easy implementing tax law changes.
