Adnan Adams Mohammed
A seasoned tax expert has called on the government to conduct cost-benefit analysis of tax exemptions before granting them.
Dr. Abdallah Ali-Nakyea, lead consultant at Ali-Nakyea and Associates have noted that citizens have every right to question tax exemptions decisions in Ghana especially as they serve as critical incentives for both domestic and foreign businesses.
According to the tax expert, the purpose of tax exemptions is to benefit the country in terms of job creation, technology transfers, export of products and services while calling on businesses to do tax health assessments to know what might not be going on well with the record keeping that may attract huge assessments during tax audits.
“Tax exemptions in areas such as Free Zone, companies must adhere to conditions precedent to the grant of the free zone licenses”, Dr. Ali-Nakyea suggested during his presentation at the University of Cape Coast School of Business second edition of the e-seminar series on the topic: “Coronavirus Pandemic, Tax Relies and Financial Reporting Implications.”
In answering a question posed by a tax auditor about the possibility of spreading the payment of tax liabilities, Dr. Ali- Nakyea explained there exists the discretion by the Commissioner to grant any reasonable payment schedule by taxpayers.
The UCC School of Business second session of the e-seminar series featured experts and professionals such as: Dr. Abdalah Ali-Nakyea of Ali-Nakyea & Associates; Dr.Isaac Nyame of Ikerm and Associates; and Dr, George Tackie, Head, Department of Accounting.
The Dean of the UCC Business School, Prof. John Gatsi in his introductory comment explained that globally, fiscal and monetary reliefs have been granted such as tax reliefs, reduction in interest rates, a moratorium in the payment of interest on outstanding loans and the cancellation of any planned announcement and payment of dividends especially in the banking sector.
He explained that all these policy decisions and directives have implications for financial reporting stating that the Coronavirus pandemic has broad implications for tax professionals, auditors and preparers of financial statements (management of companies).
According to Prof. Gatsi many companies have not been able to organize annual general meetings (AGMs) which also has implications for the approval of strategic plans and budgets among others. He said “AGMs are crucial in the fiscal and strategic life-cycle of companies. AGMs provide unique opportunities for shareholders to assess the performance of their companies and managements by evaluating the financial statements”.
He called for creativity and engagement by professional bodies in accounting, taxation, auditing, regulatory institutions and government to deal with emerging challenges. Prof. Gatsi said innovation should lead the way to ensure that the golden role assigned to shareholders through AGMs to promote good corporate governance and to make strategic decisions to foster the going concern of businesses is not truncated due to the Coronavirus Pandemic.
Prof. Gatsi said, “It was encouraging that CalBank Limited has announced its Virtual AGM will take place on 24th June 2020”. He asked that, deadline for AGMs either through virtual or traditional approach should be concluded early so as to limit possible corporate governance abuses in the absence of an AGM”.
“Disclosures of relevant events in financial statements will be critical but how much disclosures will be enough to foster confidence in financial statements by investors and other interested stakeholders will remain an important stakeholder question” – Prof. Gatsi.
On the part of Dr. Tackie, he explained that, financial reporting is an important communication between the company and its stakeholders to reflect record-keeping in a particular financial year. He explained that during the pandemic the requirement for proper bookkeeping should be enhanced because stakeholders will depend on the statements for various decision making. He explained that professionals such as accountants and auditors have the duty to maintain quality professional engagement as with or without coronavirus pandemic, the role played by credible financial statements will not change.
Dr. Tackie who is also the Head, Department of Accounting, explained that the requirement to prepare financial statement is rooted in the Companies Act and the International Financial Reporting Standards. He admonished that all the measures being taken such as cancellation of dividends by banks and moratorium on payment of interests have serious implications for financial reporting that must not be taken for granted.
Also, Dr.Nyame added that it was necessary for Ghana Revenue Authority to continue to collect tax revenue during the pandemic because the expenditure burden on the state does not reduce because of the pandemic.
He said during the pandemic Tax Officers are doing more of Desk Audit which also means after the pandemic in-depth tax audits may be conducted on same tax- payers. He advised tax payers to enhance proper record keeping because after the pandemic intensive tax audits will take place unearth tax payment abuses that might have taken place during the pandemic.
He advised the public to see the Ghana revue authority as a human institution that understand the challenges of tax payers. On whether or not students who left their hostels for about two months can claim some tax reliefs, Dr. Nyame said no rent income was earned so there is no tax relief available.
