The Private Enterprise Federation (PEF) has entreated government to take a second look at the Corporate Tax System in the country.
PEF argues that the corporate tax system is grossly unfair especially to Small and Medium Scale Enterprises (SME’s) as they are forced to pay the same 25 percent flat rate paid by large and successful businesses.
“What we are saying now is, we are identifying the challenges. We also think that the tax system should be tiered or segmented in a way so that not all businesses will pay the flat rate of 25 percent” Chief Executive Officer of PEF, Nana Osei Bonsu said.
Under the current Corporate Tax System, a company with an annual revenue of about 20,000 Ghana Cedis pays the same corporate tax as a large organization which earns about 200,000 Ghana Cedis annually.
Speaking in interview with Citi Business News at the sidelines of a workshop on tax reforms for SME’s, Nana Osei Bonsu said government must segregate tax rates based on the revenue earned by companies in the country.
“Maybe based upon your income revenue or turnover, tax system can be in such a way that you only pay the commerce rate with what you can afford. Maybe 5 percent for small and medium sized enterprises with turnover of about 20,000 and 10 percent for anybody with about 100,000 and more” he stated.
“So if we have a tiered segmented, segregated type of taxes so we will all not all be bonded together to pay the 25 percent because it looks to us like our infant industries are obviously having some problems in tax payment, he added”.
Government has been trying to meet its revenue target after it scrapped what they termed as nuisance taxes.
This resulted in more than Ghc1billion shortfall in revenue.
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By: Jessica Ayorkor Aryee/citibusinessnews.com/Ghana.