Gift Tax: Every Ghanaian who works or does business is required to pay- Legal practitioner

A private legal practitioner, Jude Attakora Tuffuor has noted that every Ghanaian who is engaged in a business or is employed is required to pay the Gift Tax to the Ghana Revenue Authority (GRA).

He however indicated that those who do not have chargeable income(neither working nor doing any business), cannot be subjected to pay Gift Tax.

“So long as you have a chargeable income. So if you don’t have a chargeable income and you receive gifts outside of those two areas (Business or employment), then it means that technically, by the strict interpretation of the law, you can’t be subjected to Gift Tax,” he noted.

Background

Naa Dromo Korankye-Ankrah, the second daughter of Rev. Sam Korankye Ankrah received $1 million from her friends as her wedding gift. She and Charles Nimo held their traditional wedding on July 7, 2021.

 Their white wedding was organized at the Royal house Chapel International headquarters in Accra where members of Naa Dromo’s father’s church and the family of Charles converged to grace the occasion.

Consequently, the High Net Worth Unit of the Ghana Revenue Authority (GRA)has in a letter that has gone viral, written to Naa Dromo Korankye-Ankrah, the daughter of the General Overseer of the Royal House Chapel, Apostle General Sam Korankye Ankrah,  to obtain information to enable it to claim taxes(Gift and Income) from her.

The GRA’s letter reads in part;

“Information available to the GRA indicates that you have received an amount of one million dollars($1,000,000) as a gift from friends.

“Further checks have established that you own a business registered as an enterprise under the name NDKA star. Our records also show that you have never filed your income tax returns to the GRA…”

Lawyer Tuffuor however agrees with the GRA’s approach and indicated that it is normal for the Ghana Revenue Authority (GRA) to go after those who publish their gifts for them to pay taxes on them.

According to him, the person who pays the tax in this instance is the one who has received the gift but not the giver of the gift.

“What GRA does is that they go after those who normally publish their gifts. For instance, a year or two ago, there was a lady who had been given a Range Rover and she went on social media that she had been given a Range Rover. When you do that and you are in employment or Business, GRA will come after you…”

The private legal practitioner, who is also a lecturer at Central University College made these statements in an interview with Dennislaw News on Tuesday, July 20, 2021.

He defined a gift as what one receives as a means of a token of appreciation of what he/she has done as against facilitation of payment for work to be done. Therefore if any amount is given after work has been done, it is categorized as a gift but if it comes during or before, it is difficult to tag it as a gift.

Furthermore, Lawyer Tuffuor added that under the old law, there was a special tax regime, which required a person who received any gift beyond a certain amount to declare and pay tax on it however under the new law, the gift tax has been engrained into employment and business.

“Under the old law, we had a special tax regime, which required that when you receive any amount above a certain threshold, I think 50 cedis, if my memory serves me right, you are supposed to declare and pay a special tax component on it.

“Now, under the new law, we do not have that specialty. The Gift Tax has been engrained into two of the tax bases that we have in Ghana and these are Business and employment. So if you receive a gift in the course of your employment or business, you add it as part of your emoluments unlike in the past, where it was considered as a separate requirement. Now it is considered as part of your business or employment so that it is not treated as a special tax element or requirement,” he added.

Also, he bemoaned the fact that the state finds it difficult to determine which fund is a gift and otherwise.

”When you talk about Gift Tax, naturally in Ghana, it is an area that the state struggles to determine which fund is a gift or what is the facilitation of business or work. What I mean is that if I am working and I receive money to help me process may be requirement faster than usual, how do you determine that this is the gift as against facilitation?.”

In conclusion, lawyer Tuffuor stressed that one may be liable to sanctions from the GRA if he/she is found to have breached or defaulted in the payment of Gift Tax.

“GRA will just sanction you either through the criminal court as evading tax under the Revenue Administration Act as someone who has failed to pay tax where you are subjected to pay two times the amount plus any interest thereof.

“Again, they can charge you compounding interest of the amount owed as a gift. Again, if you file your returns and there is evidence that a gift ought to have been added to it, they will file what we call an adjustment assessment to serve it on you for you to pay the component that has been taken from your initial attempt. if you are not happy, you can go through the independent tax appeal Court after which you can also go to court following the decision of the Independent tax appeal court,” he concluded.

Meanwhile, the General overseer of the Royal House Chapel International, Rev. Sam Korankye Ankrah, has said the $1 million given to his daughter during her royal wedding ceremony on July 10, 2021, was through a “faith cheque.”

The gift from a group of young professionals captured the public’s imagination, but he said the cheque should be viewed as solely symbolic.

Rev. Ankrah said although it is a private matter, his church found it important to clarify matters.

He also added that he did not find anything about the presentation to be fake because it was an act of faith.