The Ghana Revenue Authority (GRA) intends to widen the scope of self-assessment tax practice to cover all taxpayers by 2015, after practising it for 11 years as a pilot project at Large Taxpayer Offices (LTOs).

Self-assessment was restricted to taxpayers at the LTOs in Kumasi, Takoradi and Tema.

Self-assessment is a type of tax assessment whereby a taxpayer is responsible for accurately computing and reporting their tax liabilities -- meaning that taxpayers must show all their taxable income and claim only the deductions and reliefs to which they are entitled.

Generally, there are two main acceptable systems of tax assessment: administrative (provisional) assessment and self-assessment, with Ghana largely practising the former.

Under administrative assessment, the Commissioner-General of GRA makes a provisional assessment of a person’s chargeable income.

A taxpayer may however object to the assessment; thus, administrative assessment sometimes results in disputes between taxpayers and the GRA, thereby increasing taxpayers’ uncertainty. This is why the introduction of self-assessment is being mulled to mitigate the uncertainty.

The current law covering self-assessment is being amended to remove the restrictions and wide discretionary powers of the Commissioner-General so as to conform to universal practice, concepts and norms.

At a workshop in Sunyani to educate medium taxpayers in the Brong Ahafo Region on the self-assessment policy, Oppong Damoah, an official of the GRA, said there is a need to balance the potentially conflicting objectives of collecting income tax, protecting the rights of taxpayers, and minimising the costs of compliance and administration.

“Taxpayers know their businesses better than the tax authority, and the information provided lends itself to better data analysis,” he said.

He explained that taxpayers, under the new reforms, will have the opportunity to revise either downwards or upwards the estimated chargeable income in the course of the year should their business and/or financial circumstances change. The resultant amount, according to him, should be used to revise subsequent instalment payments.

Touching on associated penalties of self-assessment, Mr. Damoah said: “If the estimated chargeable income is less than 90 percent of the actual chargeable income, a 30 percent penalty will be imposed on the difference between the taxes calculated in respect to 90 percent of the person’s actual chargeable income for the year and the estimated chargeable income.”