The Ghana Revenue Authority (GRA) has directed all financial institutions to suspend the imposition of the 1% withholding tax on interest earned by individuals.
Following the implementation of the new income tax law by the Ghana Revenue Authority (GRA) to replace the repealed Internal Revenue Act, (Act 592) which took effect on 1st January, 2016, all interest paid to an individual is to attract 1 percent tax this means any interest accrued on treasury bills, fixed income deposit, interest from banks among others will attract a tax of 1 percent.
Interest or dividend paid to a member or holder of an approved unit trust or mutual fund is also taxed at one per cent where the holder is an individual.
The imposition of the tax has been widely criticized while players in the investment sector have warned the move could seriously affect interest in the industry which is still struggling to draw people in.
Earlier the Finance minister said the tax had been withdrawn.
A statement from the Finance Minister Seth Terkper to Citi Business News on the matter said ‘government has already submitted proposals to Parliament to reverse the position’.
Despite the announcement implementation of the tax is still in force.
But the GRA in a statement today Wednesday, 13 January, 2016 said government has submitted proposals to parliament for the reversal of the tax and in that regard financial institutions must stop charging the tax.
”We wish to bring to attention that Government has submitted proposals to Parliament for amendment of the relevant sections of the Income Tax Act 2015, (Act 896) to reverse the imposition of 1% withholding tax n interest earned by individuals.
In this regard , financial institutions are directed to suspend the imposition of 1% withholding tax on interest earned by individuals”.
By: Vivian Kai Lokko
