Question

The unexpected and unprecedented outcome of COVID-19 has seen many businesses come face to face with challenges, the likes of which they have never faced before. The virus has had serious consequences on the fiscal position of the country. Despite this, the Government of Ghana in March 2020, announced various tax incentives for specified individuals and entities in response to the impact of COVID-19 on the economy.

As a Tax and Business Strategy student, identify the various tax measures instituted by the government for individuals and businesses in this Covid-19 era, and provide reasons why you agree or disagree with the government’s intervention.

Answer 1

As we can see, the Covid Pandemic has turned out be a great nightmare for everyone around the world. The businesses saw the worst time selling their products and thereby earning enough money to meet their expenditures. Many large busiensses saw a great fall during this period whereas few have went a lot higher, making tremendous amounts of profits.

The government of Ghana introduced multiple tax and benefit strategies for its citizens as mentioned below during this pandemic time:

As the impact of the pandemic still linger on and continue to affect the revenues of the government of the day, amidst the various social interventions that have been announced by the government, businesses may not in the short term see a reduction in tax rates and also have a freeze on the taxes payable to the GRA.

Objectives

I have followed various discussions in the media recently in which most private businessmen and women requested the Bank of Ghana (BOG) to reduce the policy rate for lending in Ghana. However, during its 94th monetary policy committee meeting, the policy rate was maintained at 14.5% as current economic indicators and conditions did not support a reduction.

In its quest to support these businesses financially during these unusual times in Ghana and the world at large, the government of Ghana has on May 19th2020, lunched a GH¢1b stimulus package to support Micro, Small and Medium Enterprises (MSMEs) that have been negatively affected by the COVID-19 pandemic.

In addition to the above measures being put in place by government to sustain these businesses, this article seeks to draw attention and to educate existing and potential businesses on already existing reliefs, concessions and provisions in the Income Tax Act 2015 (Act 896) (as amended), which is intended to reduce the chargeable or taxable incomes and hence tax payable by resident businesses in Ghana so as to improve the cash flows of these businesses before, during and after the COVID-19 pandemic.

Businesses must have to be able to legally restructure or arrange their affairs so that the tax attaching to their incomes under the Income Tax Act of Ghana is less than it could be, so as to increase their tax savings and cash flows significantly.  

Donation towards a worthwhile cause (includes; Sports development or promotion, rural or urban development, a scholarship scheme for an academic, technical, professional or any other course of study, a charitable organization) (S100), COVID-19 related donations and contributions aimed at fighting the pandemic ·Any other business expense that meets the two conditions above (for example Wages & Salaries of staff, marketing & publicity, stationery, security, T&T, staff training etc.) are specifically allowed by the Act to be deducted from business Income before taxes are applied;
One major way of achieving survival by businesses is to be able to take advantage of existing tax laws by arranging its affairs in such a way as to achieve significant tax savings to improve the finances of businesses during and even after the COVID-19 pandemic.