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Ghana Revenue Authority

Taxation of Overtime and Bonus Payment

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The Commissioner-General of the Ghana Revenue Authority (GRA) wishes to inform the general public particularly paymasters, accountants, auditors and tax consultants that Regulation 28 of the Internal Revenue Regulations, 2001 Legislative Instrument (L.I 1675) which deals with

the taxation of overtime and bonus payment as amended  has been further amended by the Internal Revenue (Amendment) Regulations, 2011 Legislative Instrument (L.I. 1997). Consequently, overtime and bonus payments will be taxed as follows:

A.    OVERTIME PAYMENT

Where an employer makes a payment during a year of assessment to a qualifying junior employee for overtime work by that employee, and the payment for the overtime work to that employee

a)  is up to 50% of the basic salary of the employee for  the month, the employer shall withhold tax at the rate of 5%  from the payment

b)  is more than 50% of the basic salary of the employee for the month, the employer shall withhold tax at the rate  of 10% from the payment.

B.    BONUS PAYMENT

Where an employer pays a bonus to an employee during a year of assessment and the sum of the payment and other bonuses paid by the employer to the employee during the year

a)  does not exceed 15% of the annual basic salary of the employee, the employer shall withhold tax from the gross amount of the payment at the rate of 5%;

b)  exceeds 15% of the annual basic salary of the employee, the employer shall

i.  add any excess above the 15% payments to the employment income of the employee for the year, and

ii. withhold tax from the payment in accordance with the income tax rates for resident individuals.

The amended tax rates for the taxation of overtime and bonus payments took effect from 25th November, 2011.  The Commissioner-General requests all paymasters, accountants, auditors and tax consultants to take note and comply accordingly.

 

Commissioner-General Briefs Media

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COMMISSIONER-GENERAL MR GEORGE BLANKSON AT THE MEDIA BRIEFING ON MONDAY, 16TH JANUARY 2012

Good morning Ladies and Gentlemen of the media.  We are here this morning for the first media briefing of 2012 to bring you up to speed on the performance of the Ghana Revenue Authority (GRA) in 2011 and the expectations for 2012. Since this is our first encounter in the New Year, may I, on behalf of the management and staff of the GRA take this opportunity to wish all of you prosperity and voluntary tax compliance in the year 2012. Today’s briefing will primarily focus on the following issues:

These are:
(i)    Revenue performance for 2011
(ii)   Revenue expectation for 2012
(iii)  Current status of the GRA reform and modernization process
(iv)  The way forward for the GRA in 2012

1. 2011 Revenue Performance

The Ghana Revenue Authority (GRA) target for tax revenue in 2011 was GHC7,544.66 million.  At the end of December 2011, the GRA had collected provisionally GHC8,706.39 million,  exceeding the target by  GHC1,161.73million, giving a positive variance of 15.4%. The breakdown of the collection is as follows:

The breakdown of collection is as follows:

Domestic Taxes (Direct)
Target Collection
GHC GHC
3,130.38million 3,733.94million
(Excess 603.60million or 19.3%)
Domestic Taxes (Indirect)
1,345.76million 1,367.64million
(Excess 21.85million or1.6%)
Customs
3,068.49million 3,604.82million
(Excess 536.30million or17.5%)

Overall, the 2011 collection performance is 46.6% over the actual  collection performance for 2010.
The tax revenue/GDP ratio which collapsed to 12.7% in the wake of the re-basing in 2010, grew to 15.9% in 2011.

This is a remarkable achievement. At the High Level Aid Effectiveness Conference held in Busan, South Korea two months ago, attended by the UN Secretary General, four (4) Heads of State and the U.S. Secretary of State, Ghana’s achievement of 3 percentage points growth in tax/GDP ratio in one year came up for mention as a performance which has no precedent in recent revenue history.

Key among the factors responsible for the sterling performance of tax revenue in 2011 are:

(i)   Synergies arising from the strides made in the reform for integration and modernization e.g. joint tax audits; information sharing about taxpayers on liability to different taxes which is deterrent against taxpayers reporting different figures for different tax types etc.

(ii)  Clearance on permit, a facility which allows consignments to be removed from the port quickly and the documentation perfected later, and which became widely abused, was streamlined, resulting in about 80% drop in the use of the facility.

(iii) The introduction of the Ghana Integrated Cargo Clearance System which helps track the location of goods at the ports.

(iv)  Deployment and widening of the coverage of the Valuation Assurance Programme.

(v)   The establishment of the Rapid Deployment Force (RDF) by the Customs Division. The RDF acts on intelligence reports and clamps down on smugglers.

(vi)  Streamlining of tax exemptions.

(vii)  Effective implementation of initiatives announced in the 2011 budget including the airport tax.

(viii) Increased investment activities including the establishment of new companies in the wake of the commencement of oil production in Ghana and the good performance of gold price on the world market also gave a boost to tax revenue.

(ix)  Tax education and engagement with stakeholders across the country resulting in improved voluntary compliance.

The exceptional revenue performance of GRA in 2011 would not have been possible without the goodwill and support of taxpayers.

I seize this opportunity to commend the spirit of voluntary compliance demonstrated by the majority of taxpayers in 2011 and urge them to keep it up.  Plans are far advanced to hold a special function next month at which deserving taxpayers will be honoured.

2. Revenue Expectation for 2012

For the 2012 fiscal year, the GRA has been tasked to mobilize GHC 11,166.57million for the treasury. The breakdown is as follows:

Domestic Taxes

Direct Indirect
GHC GHC
5,035.21million 1,827.87million
Domestic Taxes (Indirect)
1,345.76million 1,367.64million
Customs
4,303.49million

The 2012 target (GHC 11,166.57) is 28.3% over and above the 2011 actual collection.

3. Integration and Modernization

Ladies and gentlemen, the broad-front revenue reform initiated with the passage of the GRA Act in the closing month of 2009, remains on equal footing with revenue target realization as the centre-piece of GRA’s activities.

The main thrust of the GRA’s modernization programme involves redesigning and improving upon the Authority’s business processes and procedures, intensifying and expanding the use of IT to improve service delivery and constructively engaging all stakeholders in a manner that will yield sustained results and confidence in the country’s tax system. The reform, integration and modernization of the GRA have chalked important milestones.

(a)  Appointment of Deputy and Assistant Commissioners
To assist Top Management pursue the modernization and reform process, Deputy and Assistant Commissioners were appointed and assigned various responsibilities in the three Divisions of the GRA in 2011. The assignment of the Assistant Commissioners is critical to the establishment of the requisite new structures in GRA. The  units headed by the Assistant Commissioners are the building blocks of the new GRA’s operational and administrative structures.

(b)  Domestic Tax Integration
The physical integration of the offices of the Domestic Tax Revenue Division, (DTRD) that is, the operational wings of the erstwhile Internal Revenue Service (IRS) and the Value Added Tax Service (VATS) designed to enhance taxpayer convenience and enable the staff discharge their duties effectively is crucial to the reform process. This is going to begin in the Accra/Tema metropolis where nine pilot sites have been identified for take-off before the end of the first quarter.  In furtherance of this, the blue print for re-organization of the existing offices of the DTRD into Medium Taxpayer Offices (MTOs) and Small Taxpayer Offices (STOs) has been completed and managers (Assistant Commissioners)  appointed to head them.

(c)  Modernization Plan
Sixteen (16) project teams were set up in 2011 under the Project Management Approach to see to the various aspects of the integration process.  The teams have completed and submitted their work which details the specific activities, associated costs and timelines. Based on this work, a Draft Modernization Plan spanning 2011 to 2014 has been produced. The approved plan constitutes a blueprint for the modernization of GRA. A draft Strategic Plan has also been completed.

4. Registration and Re-registration

The registration of new taxpayers and re-registration of existing taxpayers by the GRA and the Registrar-General’s Department (RGD) using the Total Revenue Integrated Processing System (TRIPS) under the Gegov Project commenced last month (i.e. December 2011.) Under this project the two organizations are linked electronically to enable the GRA access the database of the RGD for tax purposes. All registered businesses ultimately and individuals are being given new Taxpayer Identification Numbers (TIN). The benefits that registered businesses ultimately stand to gain from the re-registration exercise include improved quality of customer records, improved service delivery, access to a variety of online government services including filing of returns, payments, appointment scheduling, a Gegov Portal and reduced tax  compliance costs.

5. Re-location of the Large Taxpayer Office

Effective 5th September, 2011, the Large Taxpayer Unit (LTU) which had served as a pilot for functional revenue administration since 2004 re-located from the Revenue Tower at Osu to the First floor of the VAT House near the Busy Internet and commenced business as the Large Taxpayer Office (LTO) in line with the criteria for segmentation of taxpayers.

6. Relocation of GRA Head Office

With funding from GIZ/Good Financial Governance Programme, the 4th and 5th floors of the Head Office of the erstwhile Internal Revenue Service (IRS) have been renovated and refurbished. Consequently, the GRA Head Office, currently located at the 6th floor of the Heritage Tower at Ridge will re-locate to the Head Office of the erstwhile IRS in the first quarter of 2012. The building will house the Commissioner-General, the three (3) Commissioners and selected supporting staff.  This will make for easy co-ordination of programmes and activities. Renovation works are scheduled to commence soon on the remaining floors of the former IRS building, and the former VATS Head Office to accommodate the rest of GRA Head Office.

7. Legal Framework

A new Draft VAT Legislation has been produced and presented to Parliament. The Draft Bill for the Internal Revenue law is also being reviewed by a Consultant. The work of re-crafting the Customs Law will commence at the end of January, 2012. Work on the draft Tax Administration Act (TAA) which brings together the Administrative provisions of the three primary Acts governing tax administration in the country has been completed

8. The Way Forward for 2012

In spite of the challenges, the reform process is on course. GRA management is committed to ensuring that the objectives set for the modernization process are realised. Management will continue to maintain a careful balance between revenue mobilization and the reform agenda in the year 2012, to ensure that the revenue target is achieved and even exceeded to provide sufficient funds for national development.
The reform process aimed at putting revenue collection on a higher growth path in the long term will be supported by short and medium term measures which will include the following:

  • Intensification of audit particularly of Large Taxpayers
  • Quick but scrupulous examination of submitted tax returns
  • Recovery of Tax Arrears (Enforcement and Debt Management)
  • Effective tracking and interception of smuggled goods. The operations of the Rapid Deployment Force will be further enhanced to make it even more effective.
  • Regular inspection to ensure payment of taxes by operators in the informal sector Effective monitoring of the Customs Suspense regimes i.e. the Temporary Importation of Vehicles, the Transit  and the Warehousing Regimes

It is important to add that GRA management recognizes the important role that tax education and engagement with stakeholders play in ensuring compliance. For this reason, public education will be sustained and deepened. Enforcement and compliance measures will be implemented firmly and fairly. GRA management expects the co-operation of the media and the public in the rather difficult task of revenue mobilization so that together we shall all reap the benefits of enhanced revenue for national development.

Thank you for coming and God bless us all.

The Ghana Revenue Authority (GRA) target for tax revenue in 2011 was GHC7,544.66 million.  At the end of December 2011, the GRA had collected provisionally GHC8,706.39 million, exceeding the target by  GHC1,161.73million, giving a positive variance of 15.4%. The breakdown of the collection is as follows:
 

Commissioner-General Briefs Media

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MEDIA BRIEFING BY COMMISSIONER-GENERAL, MR. GEORGE BLANKSON ON MONDAY 25TH JULY 2011

Good morning Ladies and Gentlemen of the media. We have invited you this morning to this briefing session, the second in the year, to apprise you of some pertinent issues relating to the Ghana Revenue Authority (GRA) operations:

These are:
(i)    Revenue performance for the first half of 2011;
(ii)   Current status and challenges of the integration and modernization process;
(iii)  The way forward for the GRA for the second half of 2011
(iv)  Other matters of interest to the public

Revenue Performance

In the budget statement of 2011 presented by the Hon. Minister of Finance and Economic Planning, the GRA was given an overall collection target of GH¢7,208.97million excluding upstream petroleum revenue. However, in May, the Ministry revised the revenue target upwards by 4.7% bringing the total revenue target for 2011 to GH¢7,544.64million.  At the end of June 2011, the GRA had collected GH¢3,929.05million compared with the half year revenue target of GH¢3,506.13, exceeding the target by GH¢422.92million or 12.1%.

The breakdown of collection is as follows:

  • Domestic Taxes (Direct Tax) - GH¢1,622.33million (Excess- GH¢150.17million or 10.2%)
  • Domestic Taxes (Indirect Taxes) - GH¢672.79million (Excess- GH¢48.2million or 7.7%)
  • Customs (including petroleum) - GH¢1,633.93million (Excess- GH¢224.56 or 15.9%)

The total collection does not include revenue from upstream petroleum.

Integration & Modernization

Ladies and Gentlemen of the Press, the integration and modernization of the GRA which started with the passage of the GRA Act (2009), Act 791, is on course. The process of forging the erstwhile Revenue Agencies and the Revenue Agencies Governing Board (RAGB) into one entity is on course.  The divisions of the GRA as defined in the GRA Act have been established. The departments under the divisions have been set up and Deputy Commissioners approved for each department.
The support service units (e.g. finance, administration, research and monitoring, IT etc.) of the erstwhile CEPS, IRS and VATS have been merged into a division under a Commissioner, leaving the operational arms of the erstwhile CEPS, now the Customs Division and the operational arms of the erstwhile IRS and the VATS now combined as the Domestic Tax Revenue Division to function as focused and efficient operational divisions.

Status of Legal Framework

An important aspect of the reform involves pooling together into a Tax Administration Act all the administrative provisions in the Customs, VAT and Income Tax laws and recrafting the residual provisions into separate charging Acts for income tax, VAT and Customs.  In this regards

  • A separate VAT bill has been crafted, gazetted and presented to Parliament.
  • Work is ongoing on  new VAT regulations.
  • Work on the final draft of the Tax Administration Act (TAA) is expected to be completed by the end of the year.
  • Work on the Internal Revenue Act has commenced.
  • Terms of Reference (TOR) have been developed for the Customs Law and are currently under discussion.

Integration of DTRD Offices

A key element in the reform process is the integration of the Domestic Tax Revenue Division (DTRD) offices comprising the erstwhile Value Added Tax Service (VATS) and the Internal Revenue Service (IRS) to enhance taxpayer convenience and also enable the staff discharge their duties under the DTRD more effectively. This involves merging offices by co-locating staff of these erstwhile Revenue Agencies, movement of files of taxpayers, training of staff to perform on their new schedules, etc.

For a start, the GRA has identified nine (9) offices within the Accra-Tema metropolis to serve as PILOT SITES for integration of DTRD offices. Subsequently, other integrated offices will be rolled out in the Greater Accra Region and countrywide.

Effective the last quarter of 2011, the first Pilot Office which is located on the Spintex Road will open and commence business. It is envisaged that by the end of 2011 pilot offices would have been established at Adabraka, Agbogbloshie, Makola, Tema, Ashaiman, Legon, Achimota and Kaneshie. The Large Taxpayer Unit Office currently located at Osu will also be relocated to the VAT House, Adabraka on the Ring Road near Busy Internet.

The integrated offices will serve all domestic taxpayers, that is, both VAT (Indirect) and Income Tax (Direct Taxpayers) and spare taxpayers the inconvenience of dealing with separate offices for income tax and VAT.

The new computerized system for administering domestic tax, the Total Revenue Integrated Processing System (TRIPS), will be rolled out in the pilot offices. The roll out will begin with the registration module in September 2011.  The core tax administration modules (front-end services like filing returns and collections) in December 2011 and modules for back-end Services such as Audit report processing and Debt management in March 2012.) The TRIPS is an integrated revenue information system which will provide a platform for the administration of all domestic taxes under the e-Gov project. The public will be sensitized to ensure that the pilot will be a success.

Criteria for Segmentation

The integration of the DTRD offices will be done on the basis of segmented taxpayers. The criteria for segmenting taxpayers are the following:

Large Taxpayers

Primary Criterion - Taxpayers with annual turnover of five million Ghana Cedis (GH¢5million) and above.

Secondary Criterion - Specialist industries no matter the turnover:

  • Upstream and midstream petroleum companies
  • Banking Institutions
  • Insurance companies
  • Mining companies except quarries
  • Members of Groups of companies, no matter their turnover, where the group has at least one associate qualifying as a Large Taxpayer

Medium Taxpayers

Taxpayers with annual turnover above ninety thousand Ghana Cedis (GH¢ 90,000), but below five million Ghana cedis (GH¢5million).

Small Taxpayers

Taxpayers with annual turnover of ninety thousand Ghana cedis (GH¢ 90,000) and below.

E-Gov Project

As part of the reform of revenue administration, the GRA will be linked with the Registrar-General’s Department (RGD) electronically under the e-gov Project to ensure that the GRA has access to the database of the RGD to access the details of registered businesses for easy tracking for tax purposes. In connection with this, new Taxpayer Identification Numbers (TINs) will be issued to registered businesses and individuals.

Project Management Approach

The Project Management Approach has been adopted as the vehicle for the integration process consequently, sixteen (16) project teams have been set up to come out with various activities to be implemented over a three year period for effective integration and modernsation of the GRA.  The output of the project teams which will detail the measurable activities and their associated time lines and costs will constitute the blue print for the modernization. They have almost completed their work.

GRA Branding

A branding exercise is currently underway to replace the signage, bill boards and identification labels on all buildings of the erstwhile agencies with that of the GRA. The branding of GRA vehicles has been completed. The websites of the former agencies have been replaced by the GRA website www.gra.gov.gh which is up and running.

Challenges

Undertaking reforms in revenue administration and improving revenue mobilization simultaneously is quite a challenge. A careful balance is needed so that one does not take precedence over the other.

A key challenge in the integration process derives from change management issues affecting staff. The fusion of different organizational cultures, staff attitude and staff expectations from the reform process are being handled through continuous sensitization of staff to ensure their understanding of the new changes.

In order to build a credible organization, one major challenge to management is the issue of integrity of staff. With the active involvement of staff, a draft code of ethics has been developed to guide the conduct of staff in their dealings with taxpayers. Finishing touches are being put to the document for adoption and implementation.

The continuous use of the names of the erstwhile revenue agencies instead of that of the GRA by the media is also a major challenge to management. The media are our partners in the reform process. It is therefore important that you present the GRA correctly to the public.

Secondary Criterion - Specialist industries no matter the turnover:

  • Upstream and midstream petroleum companies
  • Banking Institutions
  • Insurance companies
  • Mining companies except quarries
  • Members of Groups of companies, no matter their turnover, where the group has at least one associate qualifying as a Large Taxpayer

The Way Forward

Despite the challenges, management is seriously committed to ensuring that in the second half of this year and the years beyond, mobilization of revenue achieves greater efficiency, productivity and effectiveness. At the same time, management is also committed to moving the integration and modernization process forward. Towards this end, management will give special attention to the following areas of revenue mobilization in the second half of the year.

  • Self Employed Income Tax
  • The Warehousing Regime
  • The Transit Regime
  • The Temporary Importation of Vehicles
  • Audit of Large Taxpayers
  • Debt Management
  • The National Fiscal Stabilization Levy

In addition management will ensure the following:

  • Sustained Tax Education for all Taxpayers
  • Quick Examination of Submitted Returns
  • Effective implementation of Enforcement and Compliance Measures
  • Effective monitoring of Permits
  • Effective tracking and interception of smuggled goods.  In this regard a Rapid Deployment Force has been put together and is currently undergoing training

It is the expectation of management that through effective and efficient   supervision by managers, and with the co-operation of the media, the GRA will exceed the revenue target for 2011.
Thank you for coming and may God bless us all.

 

Registration / Re-Registration of Tax Payers

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The Ghana Revenue Authority (GRA) is automating the manual processes of the Domestic Tax Revenue Division, DTRD (former IRS and VATS) to improve the quality of service to taxpayers. The review includes re-registration of existing taxpayers, registration of new taxpayers and allocation of a new Taxpayer Identification Number (TIN) to each taxpayer. To avoid double registration, applicants are to register only once at Domestic Tax Revenue Division, DTRD offices (former IRS and VATS offices).

The registration process will be carried out in phases. Phase one which involves completion and submission of registration forms to the Domestic Tax Revenue Division offices is currently ongoing. Phase Two will cover the generation of Taxpayer Identification Numbers (TIN) to taxpayers. Taxpayers will be notified when phase two commences.

The registration process will cover the following persons liable to pay tax and customs duties:

  • Companies
  • Partnerships
  • Self-Employed Persons
  • Employees (including diplomatic staff)
  • Ministries, Departments and Agencies (MDA's); Metropolitan, Municipal and District Assemblies (MMDAs)
  • Non-Governmental Organizations
  • Other organizations including Diplomatic Missions and Aid Agencies

The completion and submission of forms can be done at any Domestic Tax Revenue Division, DTRD office or at the Registrar-General's Department.

All promoters, directors and individual partners behind entities registrable under the Companies Act must register for an individual TIN with the GRA before they can complete the registration requirements with the Registrar-General's Department (RGD). A GRA desk will be available at RGD to facilitate the process.

*Please note that employees are expected to register through their employers. Employers will therefore be informed on the modalities.

Individual taxpayers must provide any one of the following identification documents for registration:

  • Voter Identification Card
  • Passport
  • National Identity Card
  • Drivers License

Organisations re-registering for a new TIN must provide the following:

  • Certificate of Incorporation / Certificate of Commencement
  • Partnership Certificate (Partnership)
  • Certificate of Registration (Sole Proprietorship), etc

All other organisations that are to be registered outside of the RGD must produce their institutional certificate or letter of introduction.

For enquiries contact the nearest GRA DTRD office. Registration forms can be downloaded from this website or  http://www.rgd.gov.gh.

 

Criteria For Taxpayer Segmentation

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CRITERIA FOR TAXPAYER SEGMENTATION

The Commissioner-General of the Ghana Revenue Authority (GRA) wishes to bring to the attention of the business community and the general public that the criteria for the segmentation of taxpayers will be as follows:

1.    LARGE TAXPAYERS

a.    Primary Criterion - Taxpayers with annual turnover of Five Million Ghana Cedis (GHS 5 million) and above.

b.    Secondary Criterion - Specialist Industries no matter their turnover

i.        Upstream and Midstream Petroleum Companies
ii.        Banking Institutions
iii.        Insurance Companies
iv.        Mining Companies except quarries

Members of Groups of Companies, no matter their turnover, which has one associate qualifying as a Large Taxpayer.

2.    MEDIUM TAXPAYERS

Taxpayers with annual turnover above Ninety Thousand Ghana Cedis (GHS 90,000.00) but below Five Million Ghana Cedis (GHS 5 million)

3.    SMALL TAXPAYERS

Taxpayers with annual turnover of  Ninety Thousand Ghana Cedis (GHS 90,000.00) and below.

All taxpayers are required to take note of the above criteria.

BY ORDER:

COMMISSIONER-GENERAL,

GHANA REVENUE AUTHORITY

 
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Latest News

August VAT/NHIL & CST Returns

The Ghana revenue authority (GRA) reminds all VAT registered persons that VAT/NHIL and Communications Service Tax (CST) returns for August 2012 should be submitted on the VAT/NHIL and CST return forms not later than Friday, 28th September, 2012 which is the last working day of the month of September.

Please be reminded that the penalty for late filing of VAT/NHIL returns is one hundred Ghana cedis (GH¢100) and a further penalty of fifty Ghana pesewas (gh¢0.50) per day for each day that the return is not submitted.  Late submission of CST return also attracts a pecuniary penalty of GH¢2,000 and a further penalty of five hundred Ghana cedis (GH¢500) for each day that the return is not submitted.

 
Payment Of Withholding Taxes - August, 2012

The Commissioner-General of the Ghana Revenue Authority (GRA) wishes to remind all Withholding Tax Agents that all taxes withheld from employment, payment for goods and services and all other withheld taxes, deducted in August, 2012 must be paid to the Domestic Tax Revenue Division (Former IRS and VAT Offices) by 15th September, 2012.

Such payments must be accompanied by a schedule, in both hard and soft copies, indicating gross amount, tax deducted and name(s) of taxpayer(s).

Please note that failure to pay the tax withheld on due date attracts a penalty of 20% (for not more than 3 months) and 30% (exceeding 3 months) in addition to the tax unpaid, (Act 592 Section 143 as amended)

NOTE    
AS 15TH OF SEPTEMBER, 2012 FALLS ON A SATURDAY, PAYMENT OF WITHHOLDING TAXES MUST BE RECEIVED AT THE TAX OFFICE BY 12 NOON FRIDAY, 14TH SEPTEMBER, 2012.

 

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Will Integration of the Revenue Agencies maximize Tax Revenue