Parliament on Wednesday February 6, 2016, approved the Income Tax Amendment Bill. The new Act, when signed by the President into law, will remove a recently imposed 1 percent tax on interests earned by investors, and also cut withholding tax from 15 percent to 7.5 percent. A blistering wave of sustained public anger forced the Mahama-government to rush to Parliament with the bill after a law passed last year, imposed what critics have called killer taxes, sparking fears that investments in Ghana could plummet and also suffocate businesses.
It is not clear as to when Parliament will communicate it’s decision on the new act to the President for action, but insiders say the “House is likely to act with extreme urgency in notifying the President on the matter” given the “huge public, business and investor interest in the provisions of the new legislation.” Stop charging 1% interest tax – GRA The Ghana Revenue Authority (GRA) on January 13 2016, directed all financial institutions to stop charging the 1% withholding tax on interest earned by individuals.
However, the move by the GRA generated angered some members of parliament since in their view, the GRA could not carry out such an action without recourse to Parliament. A member of Parliament’s Finance Committee, Dr. Mark Asibey Yeboah argued this point out out in an interview with Citi News. “If Parliament passes a law, the president assents to it, and that is the position of the law. Even the President in his press conference was not able to send a message to Ghanaians that nobody should pay that tax; the Minister of Finance cannot say same. Now the GRA sends a directive to financial institutions to stop collecting the tax. I think it’s a not right, they shouldn’t have done that and as the law stands, they should go ahead and collect the taxes because it is only Parliament that can reverse the decision,” he insisted.