A Tax Consultant Ali Nakyea Abdallah has told Citi Business News the passage of the Legislative Instrument on the Income Tax Law 2015, will settle a misunderstanding of tax deduction between administrators and auditors on taxes imposed on casual and temporary workers.
Prior to the passage of the Legislative Instrument, some auditors calculated the marginal tax rate, in addition to the tax rate of casual and temporary workers, increasing it to 17.5 percent.
But Speaking to Citi Business News, Mr. Abdallah maintained that even though the casual workers’ tax was always at 5 percent, the legislation has brought clarity on how much government expects from taxing casual and temporary workers.
“It was good that we now legislate it so the that both the tax payer and the tax administrator will be clear because it came to a time that the audit team were arguing that they would apply the marginal tax because that was the withholding tax applicable for services at that time,” he said.
He was of the view that the LI will not show what constitutes the withholding tax on services, and the main component of the tax on casual and temporary workers.
According to him, the charges were on the high side, resulting in disputes between auditors and tax payers.
He explained that despite the misunderstanding, tax payers have always insisted on the 5 percent as against the 17.5 percent.
“Anytime there is a tax audit they uncover all these to casuals over all these years and so in practice they have always tax it at five percent because that was the withholding tax at the time,” he said.
Contrary to some views that casual and temporary workers cannot be tracked due to Ghana’s informal sector, Mr. Abdallah maintained that there is record of the informal workers in some areas of the economy.
“You have them a lot at the ports for example loading goods. COCOBOD has such workers loading goods. They are all temporary and casual workers. Now that its been clarified I think its good for the economy,” he said.