The Ghana Revenue Authority (GRA) is pushing a simplified tax regime for the informal sector.

The objective is to streamline taxation for the sector, making it easier and more convenient for small businesses – especially those operating in rural and remote areas – to fulfil their tax obligation to the state, according to officials of the tax collection agency.

The matter came up at the Public Accounts Committee (PAC) hearing last week, when GRA appeared before the Committee to address infractions in the Auditor-General Report on the Public Accounts of MDAs for the year ended 31st December, 2022.

Committee chairman James Klutse Avedzi expressed concern about the non-recovery of over-due debt owed the state by taxpayers, questioning GRA officials about steps taken to recover such funds.

In response, Commissioner-Domestic Tax and Revenue Division, GRA, Edward Apenteng Gyamerah, told the Committee that the authority had difficulties in collecting tax and recovering tax debts in some instances.

“We are using our enforcement tools to collect them. This has to do with the issue relating to taxpayers in the rural areas, and it is one of the challenges we have with doing rural taxation. In some instances, we go and the shops have been closed and so forth.

“I think it is one of the reasons we are considering simplification of our tax laws, so as to deal with issues of these nature in the informal sector. Currently, as a country we have only one law dealing with all sectors – and it is an issue we are seeking to address. We need the support of us all to come up with simplified tax laws to deal with the informal sector,” Mr. Gyamerah told the Committee.

For debt-recovery in rural areas, he noted that apart from normal enforcement tools like garnishment and others, the authority uses visitations whereby officers visit the business premises of these taxpayers to ascertain whether or not they are operating. Seal-off is another tool used in rural areas, he added.

Writing-off tax debt

Regarding timelines of debt collection by the GRA, the Committee Chair as well as member of the Committee and MP for Bole Bamboi, Yusif Sulemana, expressed worry over the absence of timelines attached to tax debt-recovery.

They argued that depending on the situation, the process is time-consuming and non-economical for the Authority to chase defaulters without clear-cut timelines determining when to discontinue the task.

“At what point does it become impractical to use time and resources for chasing these debts? We should have a clear-cut guideline regarding when to stop pursuing these collapsed companies,” Mr. Sulemana stated.

The Committee’s concern was due to findings in the Auditor-General’s report that the tax office at Koforidua failed to collect some GH₵2.483million in taxes from defaulters.

The report noted that about 230 selected taxpayer files disclosed that 97 companies and 133 self-employed persons owed company income tax to the tune of GH₵1.188million and personal income tax of GH₵1.294million

Mr. Gyamerah, in his response, said the office has recovered GH₵232,166 of the total amount – adding that visits to the businesses indicate some of them have shut down.

“Some of these businesses open today and the next day they are not there. We do not write-off the debt but keep it in view, so that when promoters of the business resurface we can enforce the law,” the GRA official assured.

Meanwhile, the Commissioner-General of GRA, Rev. Ammishaddai Owusu-Amoah, assured the Committee that measures are far advanced to address these challenges.

“We have actually come out with some sort of criteria – something similar to what the banks do. We have discussed with the board and are yet to bring it to the sector ministry, and then finally to parliament for consideration. The thinking is, at some point, we should be able to look at the resources that go into it and be able to say ‘these ones are too expensive to collect’. So, there is a paper that is currently ongoing. We will send it to the ministry, and if they are okay with it we’ll bring it to parliament. It is a work in progress,” he noted.