By Ernest KISSIEDU
The payment of taxes by citizens continues to be a challenge in the country. For many citizens who are refusing to pay their taxes, their reason is that revenues are not being used for development purposes. Instead, they end up being mismanaged by authorities.
One of such groups of taxpayers is landlords. They are supposed to pay rent tax, which is paid by rent income earners on the gross amount earned in a year of assessment. The rate of tax is 8% on the gross rent income. It is a final tax.
A source at the Ghana Revenue Authority (GRA) has told Business Day that the authority is encountering difficulties in collecting the taxes even though the rent tax is backed by law and must be adhered to by all landlords and landladies.
“Rent tax is one key area that when empowered very well, can generate lots of revenues to the state. Such revenues can be used for various developmental projects throughout the country. Though we at GRA are fully aware of the revenues that the Rent tax could bring to the state, collecting these taxes can be very challenging and difficult. It is not that easy to monitor and assess the rents collected by landlords and landladies,” the source disclosed to Business Day.
Business Day’s efforts at securing statistics on the collection of rent tax proved futile as the Communication and Public Affairs section of the GRA declined to comment or give any information on the subject matter.
The problem
Although the rent tax has been in existence since the 1970s, little or no information was heard about it and interestingly, many owners of rented facilities, especially commercial buildings, do not even pay these taxes to the state. This led to the re-introduction of Rent Tax in 2013 by government.
The Domestic Tax Revenue Division (DTRD) of the GRA is the institution established under law and mandated for the collection of the rent taxes throughout the country.
The have always reminded the various entities such as Companies, Financial Institutions, Partnerships, Educational Institutions, Medical establishments and the Public Boards and Corporations as well as the Ministries that when they pay any money as rent for any residential or commercial premises, they are obliged to withhold 8% in the case of residential premises and 15% in respect of commercial premises of the gross rent paid to Landlords/landladies as rent tax and pay same to any office of the DTRD of GRA by the 15th of the subsequent month.
The departments of ministries, government agencies, co-operative societies, diplomatic missions, consular offices, international organizations and non-governmental organizations were not exempted from paying these rent taxes.
When GRA re-launched the 8% Rent Tax in 2013, it sought to bring to the attention of landlords and landladies who default in the payment of the tax to perform their civic duties.
Failure to pay tax, when due, attracts an interest of 125% of the statutory fee and this is compounded on a monthly basis.
According to the then Chief Revenue Officer at GRA, Kwasi Bobie-Ansah, because landlords usually collect rent in cash, it is difficult for the GRA to track how many people are collecting rent and how much rent they are collecting, adding that it therefore becomes equally difficult to collect rent tax.
“As part of the re-launch, the GRA has set up a taskforce of men and women who would go round homes, shops and offices to find out how much rent the tenants paid so the landlords and land ladies could be made to pay the 8% tax on the income they received,” he had said.
Housing ministry steps in
Meanwhile, the Works and Housing Ministry has revealed that it has initiated processes to get Parliament to pass four legislations to regulate activities in the housing sector. The move will see the passage of two new Bills and the amendment of two others.
The two new Bills are the Real Estate Agency Bill and the Condominium Bill.
According to Deputy Works and Housing Minister, Freda Prempeh, the Building Codes and the Rent Act are to be amended.
