The Group Chief Executive Officer of Databank Ghana, Kojo Addae-Mensah has stated that the new income tax law which will take effect from January 1, 2016, is a threat to the growth of the nation’s investment banking sector.
The law seeks to tax the returns investors will make from their investments.
Hitherto investors where paid the full profits accrued from their investments, but with the new law it means one’s profit accrued will be taxed.
“Your income has already been taxed, it is your disposable income that you have brought to a company like Databank to invest so that you can make some gains for the future.
“But that gains that you are making according to the law per my understanding will now be attracting a certain tax. We had a little seminar with the GRA authorities and we believe that they didn’t quite get the impact on us to the extent that it’s going to hit us,” Addae-Mensah told host of Morning Starr Nii Arday Clegg.
He added that, “…It is going to even affect pension funds as well. The thing about the way we invest is, we invest in pools so it is very difficult when you have brought in a pool of funds to say Nii’s own is a pension fund and Kwame’s own is not and differentiate, because the pension act, it has some tax exemption there but then when you bring it to the income tax fray then the taxes start hitting it”.
The move, he believes, will demotivate people from investment banking; a sector that is struggling to grow.
“Already we are struggling to get people to part away with disposable income to invest and then those who have managed to do that, the little returns they are having you are going to go ahead and tax that too that is going to be a problem.”
Background
The Ghana Revenue Authority (GRA) will implement a new income tax law to replace the repealed Internal Revenue Act, (Act 592) with effect from January 2016.
The new tax, Act 896, 2015, which was made known Tuesday, is to remove the narrow and distorted tax base of the old Act.
While the new law contains some provisions in the old act, other sections have been modified and new provisions introduced to make its compliance easy for taxpayers.
In the new act, specific provisions that guide the different methods and time for payment, including tax payable by withholding, tax payable by instalment and tax payable by assessment have been spelt out to improve and facilitate tax compliance.
By Osei Owusu Amankwaah
