HIGHLIGHTS OF TAX AMENDMENTS IN 2020

This article highlights Ghana’s tax laws amended in the year 2020 including amendments made in December of 2019 to take effect in the 2020 assessment year. The tax laws considered under this article are the Income Tax Act, Value Added Tax Act, Customs Act, the National Fiscal Stabilisation Levy Act, and the Revenue Administration Act.

Income Tax (Amendment) Act, 2019 (Act 1007)

PAYE Scale: The PAYE scale maintained the same number of bands as no new tax band was added, however, some of the existing bands were either increased or decreased. The first band enjoying a nil rate of tax was increased from GHS3,456 to GHS3,828. While the second band at 5% tax was maintained, the third band at 10% tax was decreased from GHS1,680 to GHS1,440. The fourth and sixth bands at 17.5% and 30% respectively tax were maintained with the fifth band at 25% tax reducing from GHS197,664 to 197,532.

The PAYE scale commencing January 2020:

Chargeable Income Tax

1. First GHS3,828 - Nil

2. Next GHS1,200 - 5%

3. Next GHS1,440 - 10%

4. Next GHS36,000 - 17.5%

5. Next GHS197,532 - 25%

6. Exceeding GHS240,000 - 30%

Tax Reliefs: The deductible personal reliefs for individuals provided under the Fifth Schedule to Act 896 were increased under Act 1007.

· Personal relief for an individual who has a dependent spouse or at least two dependent children was increased from GHS200 to GHS1200.

· The personal relief for an individual with a disability was maintained at 25% of that individual’s assessable income from business or employment.

· The personal relief of an individual who is sixty years of age and above was increased from GHS200 to GHS 1,500.

· Relief for an individual who is sponsoring the education of the child or ward in a recognized educational institution in Ghana was increased from GHS200 to GHS600 per child up to a maximum of 3 children or wards.

· Relief for an individual who has a dependant relative increased from GHS100 per dependent relative to GHS1,000 per dependent relative.

· An individual who has undergone training to update the professional, technical, or vocational skills or knowledge of the individual now benefits from a personal relief up to GHS2000, an increase from GHS400 under Act 896.

Tax Concession: Act 1007 introduced a tax concession under the Sixth Schedule to the Act for registered manufacturers and assemblers of automobiles under the Ghana Automotive Manufacturing Development Programme. Under the tax concession provision, the income of a manufacturer or assembler in respect of the manufacturing or assembling of semi-knocked down vehicles enjoys exemption from tax for 3 years from the date of commencement of the manufacturing or assembling. In the case of complete-knocked down vehicles, the exemption is for 10 years from the date of commencement of the manufacturing or assembling business.

For a manufacturer or assembler who starts with semi-knocked down vehicles but subsequently converts to complete-knocked down vehicles the concessionary period cannot exceed an aggregate period of 10 years.

Income Tax (Amendment) Act, 2020 (Act 1017)

Withdrawal from Provident Fund or Personal Pension: Act 1017 amended section 94 to introduce sub-section (4) which exempted a withdrawal by an employee (due to loss of permanent employment) from a provident fund or personal pension before the retirement age because of the Novel Coronavirus pandemic or; a withdrawal by a self-employed person in the informal sector from their personal savings account under their voluntary pension contributions.

Value Added Tax (Amendment) Act, 2019 (Act 1005)

Exempt Supplies: Act 1005 amended the Value Added Tax Act, 2013 (Act 870) in the First Schedule to the Act by exempting from VAT the importation of plant and machinery designed specifically for use in the automobile industry and kits by an automobile manufacturer or assembler who is registered under the Ghana Automotive Manufacturing Development Programme.

Management fees charged by a local fund manager for management of a licensed private equity fund, venture capital fund, or a mutual fund were also exempt from VAT under the amendment Act.

Customs (Amendment) Act, 2020 (Act 1014)

Rebate of Import Duty: Act 1014 amended section 55 to give the Minister of Finance the authority to grant an automotive manufacturer or assembler who is registered under the Ghana Automotive Manufacturing Development Programme a rebate of the import duty on fully built units imported from the original manufacturer of the units.

Prohibited Motor Vehicles: Section 58 was amended to include in the prohibited motor vehicles the importation of salvaged motor vehicles as well as certain vehicles over 10 years of age as specified in the Act.

National Fiscal Stabilisation Levy (Amendment) Act, 2019 (Act 1011)

Act 1011 amended the National Fiscal Stabilisation Levy Act, 2013 (Act 862) in section 4 to extend the date of the expiration of the Levy to 2024.

Revenue Administration (Amendment) Act, 2020 (Act 1029)

Tax Appeals Board: Act 1029 introduced a Fourth Schedule which establishes the Independent Tax Appeals Board with the function of hearing and determining appeals against decisions of the Commissioner-General (“C-G”) with respect to objections. In view of the above, appeals against the decision of the C-G under section 44 must be made to the Independent Tax Appeals Board after which an appeal may be made to the Court.

Section 74(2)(b) of Act 915 was amended to vacate imposition of the penalty for making false or misleading statements where a person voluntarily discloses to the C-G an error inadvertently made by that person before the error is discovered by a tax officer; or before the next tax audit of that person.

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