With effect from August 1, 2006, land property owners who fail to pay tax on their rent incomes, or under declare their rent incomes, will be prosecuted. Commissioner of Internal Revenue Service (IRS), Major (rtd) Sam, Ablorh-Quarcoo has stated.
He was speaking at a media dialogue organized by the Ghana Journalists Association (GJA), in collaboration with Business Sector Advocacy Challenge Fund (BUSAC) Fund.
"High rents and the so called goodwill being collected by landlords country wide, is common knowledge but this has not reflected in the rent tax collected by the service", he stated.
The dialogue was under the topic "The tax net as it affects micro and Small Scale Enterprises."
Major Ablorh said, the IRS will soon embark on an exercise in all the regions, with the view to ascertain the number of people outside the tax net.
He explained that, under the present IRS laws, individuals in receipts of rent income are required to pay tax at the rate of 10 per cent, on the gross rent income in a year of assessment.
He said, only 1.4 million Ghanaians are known to be registered tax payers.
"The self-employed, constitute only a fraction of the total accounting for about 200,000 tax payers. This leaves
Major Ablorh-Quarcoo said the large size and widespread nature of SME's coupled with a situation where businesses could operate without license or permit, made tax payer identification a major problem.
Besides, the non-regulated address system in the country further worsens the situation as it made it difficult to trace and hold a person to account for income earned from economic ventures throughout the country.
"In addition, there is the issue of low compliance in respect of non-payment, non filling and stop filing of returns due to low level of tax consciousness among most operators in the informal sector, inadequate or poor record keeping due to high illiteracy rate, complex nature of the tax laws and procured and lack of enforcement of collection procedures on the part of tax officers, he added.
Major Ablorh said, the IRS was adopting various measures such as the vehicle income tax sticker designed for commercial transport operators and the tax stamp system, which focus on micro and small-scale enterprises.
The President of the Association of Small Medium Scale Enterprise, Richmond Tetteh, said government must provide tax incentives to have SME's in paying tax.
"Apart from tax incentives, vigorous educational campaign must be undertaken to raise the awareness and benefits of paying tax.
Participants expressed concern about the attitude of IRS officials and the seizure of their property in default of payment of their taxes.