Early preparation is the best way to avoid tax trouble and reduce your taxes. This blog discusses the issues you must consider and address as 2018 ends.
So, what must you consider? Please read on to find out.
1. Filing of Returns
Have you filed the following tax returns?
- Monthly withholding tax returns.
- Monthly VAT returns.
- PAYE returns.
- Company income tax return.
- Revised corporate estimate, if applicable.
2. Payment of All Taxes by Due Dates
- Did you pay all taxes based on the various returns you prepared?
- Did you object to any tax assessment raised by GRA?
- Was the objection resolved and the tax agreed paid?
- Have you paid the quarterly estimated taxes to GRA?
3. Taxpayer Identification Number for Employees
- Did your company recruit employees staff this year? If yes, you must complete and file the “Newly Engaged Employees Schedule (DT 107 B)” for each new employee.
- Have you filed the “Disengaged Employees Schedule (DT 107 C)” for the employees who left? If no, complete and file this return.
- Do all your employees have a Tax Identification Number (TIN)? Ensure you rectify this if some do not have it. Your returns on employees are incomplete without their TIN.
4. Withholding Taxes
Taxes you withheld
- Have you withheld taxes from payments made to your suppliers throughout the year?
- Have you applied the correct rates?
- Have you filed returns for all of the months in which you withheld taxes?
- Have you paid the taxes to the Ghana Revenue Authority?
- Have you collected the withholding tax credit certificates for the payments you made?
- Have you given the suppliers their copy of the certificates?
Tax audits have revealed withholding taxes as a problem area. It is a focal point for tax auditors, so ensure you are compliant.
Taxes withheld from you
Have you got all withholding tax credit certificates for taxes withheld by your customers? If you have not, please chase them. You need them to offset against your income tax.
5. Value Added Tax
- Have you prepared and filed all Standard Rate, VAT Flat Rate, NHIL, and GET Fund Levy returns?
- Have you filed NIL returns for the months in which there were no transactions?
Take note of the following:
- Up to July 31, 2018 you had to prepare and file only one VAT & NHIL Return if you run the 17.5% standard rate VAT/ NHIL system.
- The amended VAT law took effect from 1st August,2018. You must now file two returns every month – the 12.5% VAT return and the 5% NHIL & GETF Levy return.
- For businesses using the 3% Flat Rate VAT scheme there is no change.
6. Self Assessment Estimates
If you are a medium or large taxpayer, you must prepare and file an estimate of taxes payable for 2019.
You must file the estimate three months after the end of your accounting year. For example:
- If your accounting year ends on 31st December, file the estimates by 31st March of the following year.
- If your accounting year ends on 30th June, file the estimates by 30th September of the same year.
To help you file a meaningful tax estimate, you must prepare a budget for 2019. Prepare the budget with care – do it first for the management of the business, and then for taxes.
The budget must include the following:
- Profit and loss.
- Balance sheet.
- Cash flow (highly recommended).
- Fixed assets additions.
- Details of expense.
Using the above, prepare the quarterly tax estimate. Would you have cash to pay the quarterly taxes? Carefully assess your cash flow. If your projection shows that you will not have enough cash, make plans to raise cash to meet the taxes.
Review your tax estimates throughout the year. If there are significant changes, revise the estimates you filed with GRA.
We recommend that you seek the help of a tax adviser to prepare the estimates.
7. Tax Audits
In recent months, GRA has intensified tax audits and it is covering a wide range of entities.
The tax auditors have an uncompromising attitude. The risk you will be selected for an audit is high and can be costly if you are not compliant. It is important to make sure that you are always compliant. The steps outlined above will help to keep you compliant.
Employee Related Returns Due After The Year End
As we come to the end of 2018, please note the due dates of the following returns:
|RETURN||DUE DATE||SANCTIONS FOR NON-COMPLIANCE|
|Filing of Annual Employer Deduction Schedule||
30th April 2019
|Penalty of GHS 500 in case of default and GHS 10 for each day of default|
|Filing of Annual Personal Income tax returns for Directors, Managers, Expatriate employees etc.||30th April 2019||Penalty of GHS 500 in case of default and GHS 10 for each day of default.|
8. Tax Clearance Certificates
If you will need a tax clearance certificate for reasons such as bids and renewal, you must plan for it. You must also make sure you are up to date with tax filings and payments.
To avoid delays, make sure you send your application ahead of the time you will need it. The process can be obscure, with tax officers raising issues that can cause processing delays.
Read our blog “How to get a tax clearance certificate without any hassle”.
In Summary: The Tax System Is Tightening
This year, the GRA has been aggressive about taxes. They have also expanded the use of tax audits and are quick to penalize delays in filing returns. We expect that the system will continue to get tighter.
The lax days are over, and you cannot be careless about taxes. A “do it yourself” approach to tax is risky, as many taxpayers have found to their cost! We strongly recommend that you seek the help of a tax adviser.
If you need help with taxes, please contact SCG Chartered Accountants.
Written by: Tom Ebenezer Asaam