Tax Refunds accrued GH¢29.11 billion in 8 years
If you heard the term tax refund for the first time when the Minister of Finance, Dr. Cassiel Ato Forson, mentioned it, this article is here to satisfy your curiosity.
The minister stated that a study on the use of tax refunds over the past eight (8) years revealed that GH¢29.11 billion had accrued to the tax refund account. However, only GH¢12.5 billion representing 43% of the total accrued amount was used for tax refund purposes.
He further disclosed that the study found GH¢16.6 billion, representing 57% of the total amount accumulated in the tax refund account, had been misapplied.
This, he noted, is a clear violation of the Revenue Administration Act, 2016 (Act 915) and the Public Financial Management Act, 2016 (Act 921).
A tax refund is simply a reimbursement to taxpayers for any excess amount paid in taxes to the government.
According to the Ghana Revenue Authority (GRA), a tax refund is due when your prepaid taxes and tax credits exceed the tax charged for the year.
The GRA can issue the refund in cash or grant you a tax credit, which can be used to offset future tax obligations.
How does one apply for Tax Refunds
A taxpayer may within 3 years of the relevant date, apply to the Commissioner–General for a refund of tax paid in excess of the tax liability of that taxpayer.
The process for application is as follows:
The Commissioner–General prescribes the form of the application.
The application must be in writing and include an explanation on how the excess is calculated and attach relevant evidence.
Note: ‘Relevant date’ above means the later date of
1. The date of the event that caused payment of excess tax.
2. The date on which the tax return is filed by the taxpayer on that payment.
3. The date of payment of excess tax.
Decision on application for Tax Refunds
The Commissioner–General shall within 60 days of receipt of an application for a refund, consider it and make an appropriate decision.
The decisions made could be:
1. A rejection of the application where the Commissioner General has the opinion that the taxpayer did not pay excess tax.
2. A refund made to the taxpayer if satisfied that excess tax was paid.
3. Further information may be requested to assist in making a final decision, If the Commissioner–General is not satisfied that excess tax was paid.
A written notice of the decision made will be served to the applicant within 30 days.
In the case of option (3) above, the Commissioner- General shall reconsider the application and make a decision by serving notice on the applicant within 60 days of receiving the original application.
Payment of Tax Refunds
1. Where the Commissioner-General is satisfied that a person is entitled to a tax refund, either after application by the taxpayer or by order of a court or tribunal, the Commissioner–General shall:
a. Apply the excess as a reduction of any outstanding tax liability; and
b. Refund the remainder to the person within 90 days of making the decision.
2. Where the Commissioner–General accepts to refund part of the excess tax applied for by a person, the Commissioner–General shall refund the amount accepted, irrespective of whether the person files an objection against the decision of the Commissioner–General.
3. Where, the Commissioner–General fails to refund the excess tax within 90 days as specified, the Commissioner- General is liable to pay interest on the amount.
4. The interest is calculated as 50% of the statutory rate and is for the period beginning from the earlier of either.
a. The date the refund decision is made; or
b. The day the person files an objection against the tax decision that gave rise to payment of the excess tax.
And ending on the day the refund is made.
5. Interest paid by a person under a tax law with respect to tax not paid on time shall, where the tax is found to have been payable, be refunded to the person with any interest.
6. Where the Commissioner–General refunds tax in error, the Commissioner–General may recover the refund as a tax liability.
SSD/MA
KPMG calls for inclusion of informal sector, online businesses in tax net