Rev. Ammishaddai Owusu-Amoah, the Commissioner-General of the Ghana Revenue Authority (GRA) has announced the introduction of rent and e-commerce tax by end of 2021.
This is in line with Ghana Revenue Authority’s 2021 strategies to increase its revenue portfolio. Earlier in the year, GRA noted it was targeting some GH¢600 billion in revenue to support the nation’s expenditure.
Speaking at the Ghana Financial Intermediation Awards on Friday, June 11, 2021, Ammishaddai Owusu-Amoah, announced the introduction of the Rent Tax App which will have data of every Ghanaian and will allow the authority to know if a property occupancy is owned or rented. It will also allow for the convenience of paying the rent tax which according to GRA must be paid within 30 days after the rent income is received by the landlords or property owners.
“For the good of everyone, we have introduced the rent tax app which has everyone’s data on it. If your name is searched the app will take us directly to your location and then when we get there we will be able to identify whether the property is owner-occupied or rented. This will not make it possible for anyone to hide from paying your taxes. If you have a property you are renting, start paying the rent tax. We should all be compliant with this new ideology. Currently, we have started implementing the app at Accra, Kumasi, Tema areas,” Ammishaddai Owusu-Amoah said.
The commissioner cautioned that the failure of landlords or property owners to pay their rent tax will lead to an interest charge of 125% of the statutory rate compounded monthly.
“Failure to pay your tax on rent income by the due date will attract an interest of 125% of the statutory rate compounded monthly. Remember to make available copies of all receipts of payment of rent tax for inspection by officers of Ghana Revenue Authority (GRA),” the Commissioner-General added.
Given this new insight, one may ask, what is rent tax? And what is the tax rate?
Rent tax is tax paid on rent income (i.e. income that accrues to someone as a result of letting or leasing a property to another person). Two rent tax rates exist, an 8% tax rate on residential premises and a 15% tax rate on commercial properties.
E-commerce, also known as internet commerce refers to the buying and selling of goods and services via the internet. The e-commerce industry in Ghana has seen a steady rise in both market value and the new players particularly during the rise of COVID-19. According to the Executive Director of the E-commerce Association of Ghana, Mr. Paul Asinor, the industry is expected to reach market revenue of US$811 million by 2024. Given this insight, it is without question why GRA is seeking to strengthen revenue mobilization in this sector.
“There will be vigorous efforts to tax players in the e-commerce market. This sector has been a challenge over the years for the authority, but this year, we are providing staff with the requisite training to enable them identify players in the sector for tax purposes,” the Commissioner of GRA said.
Likely impact of these taxes
The introduction of the rent and e-commerce tax may negatively impact consumers. Landlords may increase their rent to cater for the tax deductions they have to incur. Also, e-commerce platforms like Tonaton, Jumia, and Zoobashop may increase their service charge affecting consumer’s purchasing power. Already, consumers are saddled with the overbearing fuel price hike which has led to increased transportation cost and a rise in the price of basic consumables.