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Business News of Thursday, 21 June 2018

Source: citinewsroom.com

Ghana loses GHC8b annually over non-payment of gift tax

Ghana is reported to be losing about GH¢8 billion annually due to the non-payment of taxes on gifts received by citizens, including government officials.

This is according to a report by the Institute of Liberty and Policy Innovation (ILAPI).

The report took the views of some 6200 respondents on the payment of gift taxes. The President of ILAPI, Peter Bismark Coffie in a Citi News interview said some government officials were ignorant of the existence of a gift tax law that mandates anyone who receives a gift to pay a portion of the value of the gift as tax to the government.

He said ignorance of the law made its enforcement impossible.

The research also showed that close to 95 percent of respondents were unaware of the law.

“From the research that we did, we realized that individuals across the country do not know anything about gift tax including the government officials themselves so it tells you that education needs to be done.”

“We did this economic analysis and realized that if six thousand two hundred Ghanaians [6200] are evading ¢54 million, but it seems no one is paying this gift tax. So annually the government is losing ¢8.863 billion from gift tax alone,” Peter Coffie said.

He said on average, the country loses GH¢200 every second due to the non-payment of the gift tax.

Mr. Peter Bismark Coffie argued that, the gift tax could be a funding source for the government’s flagship policy programmes such as the Free Senior High School programme.

He added that the potential revenue the country could accrue from the tax could be a panacea for the country to be independent of foreign aid and become independent financially.

“…And every second the government is losing over ¢200, so that is losing ¢8.863 billion annually by just 1 million Ghanaians. It tells you that even if we have just 2 million Ghanaians who are paying, then government may have twice of that amount and we may not need oil money for free SHS, we may not need loans from IMF and the world bank,” Peter Coffie said.

He, therefore, called on the government to create more awareness through education and enforce the law backing the gift tax in the country.

About the gift tax

The Internal Revenue Act 592 stipulates that Ghanaians are to pay 15 per cent gift tax rate on any gift valued at GH¢50 and above.

The value of the gift would be determined according to its market value at the time it was received.

The receiver of the gift is expected to pay within 30 days of receiving such a gift.