Returns on treasury bills now taxable

With effect from November 15, corporate investors in money market instruments will be required to pay 10 per cent on their investment income. This is applicable to companies and organizations, which invest in treasury bills, call accounts, fixed deposits, overnight placement among others.

However, individual investors are exempted from the payment of the withholding tax.

Leading the crusade for the deduction of withholding tax on interest payments is the Internal Revenue Service (IRS), which is under a lot of pressure from government to increase its revenue collection.

Already, there have been series of meeting and correspondence between the IRS and the Ghana Association of Bankers regarding the setting of the deadline for effective the deductions.

Though it was uncertain how much revenue could be accrued from its implementation, money market dealers estimate that government stand to earn billions of cedis. Investigations show that financial institutions such as finance houses, discount houses and the banks are gearing up to start effecting the payments of the withholding taxes.

The Internal Revenue Act, 592,200 makes it lawful for the 10 per cent rate of withholding tax to be applicable to interest payments. Until last year when the law was promulgated, interest income was generally not being taxed.