2024 Tax news: Consultant’s reflection

Ghana has just wrapped up a pivotal year, economically and politically.

The year started with efforts to recover the economy and manage debts following the start of the IMF bailout programme in 2023.

Since it was an election year, there were some tensions, but the election was peaceful, reinforcing Ghana’s reputation as a stable democracy in West Africa.

Taxation is influenced by various factors, including politics and economics. This means tax issues which may be influenced by politics can impact the economy, including how revenue is generated and how public spending is financed.

To achieve Ghana’s tax goals, it is essential for taxpayers and governments to reflect on tax policies and laws to ensure effective compliance and administration of the tax laws.

This two-part article aims to provide that reflection by reporting on notable 2024 tax news.

While last year saw relatively minimal changes to existing tax laws, the Ghana Revenue Authority (GRA) issued several administrative documents to enhance tax administration and aid compliance.

As we look ahead to 2025, it is essential to continue monitoring tax reforms and their impact on our Ghanaian economy.

The first instalment of this two-part series will cover the events and developments of the first quarter of 2024.

The subsequent article will delve into the highlights and key moments from the remaining quarters of that year.

Quarter 1

In January 2024, several laws passed in 2023 came into effect. These included:

Customs (Amendment) Act, 2023 (Act 1106): providing duty waivers for imported raw materials used in manufacturing sanitary towels and updated tariffs on other imports.

The Value Added Tax (VAT) (Amendment) Act, 2023 (Act 1107): Introducing a 5 per cent flat rate for estate developers, added standard VAT on non-life insurance contracts, and zero-rated locally manufactured sanitary towels.

It also extended the zero-rating of locally assembled vehicles and printed textiles until 31 December 2025, and introduced 30 per cent penalty on VAT withholding agents who fail to withhold VAT.

The Excise Duty (Amendment) (No. 2) Act, 2023 (Act 1108): Revising excise duty rates on cider beer and plastics.

The Stamp Duty (Amendment) Act, 2023 (Act 1109): Revising the stamp duty rates.

The Exemptions (Amendment) Act, 2023 (Act 1110): Providing exemptions from import taxes on fishing gear meant for agricultural purposes, as certified by the Minister of Fisheries and Aquaculture (Development) and approved by the Minister of Finance.

The Income Tax Amendment (No. 2) Act, 2023 (Act 1111): Revising personal income tax bands for resident individuals to expand the tax-free band, reflecting the increase in the minimum daily wage from GH¢14.88 to GH¢18.15 per day (i.e., less than £1 per day).

Emissions Levy Act, 2023 (Act 1112): Imposing an emissions levy on carbon dioxide emissions from specific sectors and internal combustion engine vehicles.

Some of these tax laws caused a stir among taxpayers. The emissions levy sparked controversy and was effectively suspended, while changes to resident individual (“PAYE”) tax table led to confusion.

The GRA updated its online tax portal to correct the tax tables, bringing some certainty and (temporally) ending the debate on their implementation.

We hope the Finance Minister fixes the mistake by submitting a new income tax bill to Parliament.

To avoid such future issues, the government should make income up to the minimum wage “exempt” (instead of giving it a zero per cent tax rate) or treat it as a “personal allowance”, simplifying the tax process for everyone.

Some time in January, the Ministry of Finance announced plans to implement VAT on residential electricity above the lifeline limit.

This requirement has been in the VAT law which is over a decade old but was never enforced.

Due to public outcry, the plan to implement VAT on residential electricity was dropped.

This situation raises the question of why some parts of our tax laws have been gathering dust for years but are still on our statute books. 

It’s time for the government to update these “outdated” provisions, making our tax system relevant for everyone.

Later, the GRA announced that vehicle owners must pay emissions levy through the ghana.gov platform starting February 1.

Although guidance on accounting for the levy was limited, this initiative marked a step towards better environmental accountability. By the end of the year, the tax was still not fully implemented, raising questions about why the Driver and Vehicle Licensing Authority was not used as an alternative means for collecting the emissions levy.

In the same month, the Court of Appeal released its decision on the Blue Sky Products (Ghana) LTD vs. The Commissioner-General of the GRA case.

The court upheld the High Court’s ruling, affirming that the tax rules for producers and exporters of non-traditional products and those for freezone enterprises engaged in export activities are separate and distinct under Ghana’s Income Tax laws. This decision should bring clarity to businesses operating in these sectors.

In March 2024, the National Petroleum Authority announced the suspension of the Price Stabilisation and Recovery Levy (PSRL) on petroleum products for the period from April to June 2024.

This measure was taken in response to escalating global petroleum prices, with the aim of stabilising fuel costs for consumers by curbing the rate of increase. This decision raises the question of whether the PSRL should be reviewed to include an automatic (inverse) adjustment mechanism to achieve similar objectives.

The GRA also issued several practice notes and administrative guidelines to ensure full compliance with existing tax laws. These include:

• Guideline on the Requirement to Show Commissioner-General’s Tax Invoice as Proof of Expenses incurred for Income Tax Purposes: This document directs that failing to obtain a VAT invoice may result in taxpayers being denied income tax deductions for those expenses.

• Practice Note on the Application of Minimum Chargeable Income Under the Income Tax Act 2015 (Act 896): This note details how to determine if a business falls within the scope of minimum chargeable income and how the calculation should be performed.

• VAT Administrative Guidelines on the Supply by the Estate Developer and the Supplier of Immovable Property for Rental Purposes: This document
provides instructions on implementing VAT on supplies of immovable property by estate developers and others.

• Practice Note on Obtaining Double Taxation Relief Under the Income Tax Act (Act 896): This note outlines the requirements for taking advantage of reliefs under a double tax agreement.

Some commentators feel the GRA has overstepped its authority with the above documents, causing issues such as unfair denial of legitimate income tax claims and
inconsistent guidelines for minimum chargeable income.

The COVID-19 recovery levy applied in the context of five per cent VAT rate without including the health and education levies also seems contradictory. 

Despite these comments, we commend the GRA for its efforts to clarify tax laws and encourage taxpayers to follow the guidelines as practically possible.

By working together, we can create a more productive and fair environment that benefits everyone and builds a Ghana we can all be proud of.

To conclude, this first part of the article reflects on Ghana’s pivotal year, marked by economic recovery efforts and a peaceful election, with a focus on taxation’s role in revenue generation.

It highlights notable tax news from the first quarter of 2024, emphasising administrative updates by the GRA.

The second article will discuss key developments from April to December 2024, including significant court rulings, updates on electronic VAT implementation, mid-year budget plans, and the re-election of President John Dramani Mahama with his fiscal reform pledges.
 
The writer is Partner, PwC.
E-mail: abeku.gyan-quansah@pwc.com