Just about 1.5 million Ghanaians pay direct tax out of the six million eligible taxpayers, Finance Minister, Ken, Ofori-Atta, told delegates at the just-ended 2018 World Bank/IMF Springs Meetings in Washington DC, USA, reinforcing the position of the government to widen the tax net instead of piling up more on the already taxed.
The majority of the country’s estimated 27 million population is in the informal sector, where people hardly pay any tax on their incomes. The government has over the years had to offset this with transaction-based taxes like the value added tax.
A tax expert has recently urged Ghanaians not to engage the services of masons, carpenters, plumbers and many other workers in the informal sector who do not have a Tax Identification Number (TIN).
Mr Ofori-Atta said government shall be compelled to prosecute persons who fails to file their tax returns, stressing that the introduction of Tax Identification Number (TIN) is one of the policies adopted by the government to widen the tax net.
“Tax evasion is an illegal practice where a person, organization or corporation intentionally avoids paying his true tax liability. Those caught evading taxes would be subjected to criminal charges and substantial penalties,” he warned.
Ghana has recently introduced a system where all citizens must register for a Tax Identification Number. The move has been widely unpopular and, some say, too sudden. The Ghana Revenue Authority (GRA) introduced a new tax system, requiring all Ghanaians to have a Tax Identification Number (TIN) on April 1, 2018.
Without a TIN, Ghanaians cannot apply for passports, register land, clear goods, register a vehicle or apply for driver’s licenses. Obtaining a payment from a government agency, opening a bank account or bidding for a contract without it is also impossible.
The goal of the new system is to introduce tighter controls to ensure that taxes are paid on all earnings. But the new directive is very unpopular, especially among people working in the informal sector.
Concerned locals
Bawa Kweku, who works as a nurse in Tamale, told this paper recently that he is afraid of running into trouble unless he registers for a TIN.
“I have been told that without the TIN I wouldn’t be able to access my salary. And then there are other transactions that I will not be able to transact without the TIN. So that has encouraged me to come and then register for it.”
The TIN can be obtained within 24 hours after showing a valid passport, voter ID or a driver’s license. This is to ensure tax compliance and widen the tax net.
Another local resident, Alex Gyanfi, said he was registering for a TIN in order to apply for a passport.
“It is a requirement now at the passport office because I went for renewal and I was told that without a TIN number I can’t I have a new passport, so it was a surprise to me and a challenge as well.”
How it works
Registration for a TIN is free for every Ghanaian and the Revenue Authority has established registration centers across the country. Alhaji Aminu Sulemana Sachibu, head of the Ghana Revenue Authority in Tamale, told the media sometime ago that each person is given an individual number.
“It is unique to everybody and it is an 11 digit number.” The GRA says this approach is part of a national drive to ensure tax compliance.
