TAXATION

The definition of a tax reflects certain essential elements as follows:

>Taxation is not negotiable, meaning that taxation is not based on contract, but on compulsion.
>Taxation results in the alienation of individual property in favour of public or collective use and
such alienation is possible only under the law as applied by the State.
>Not all compulsory levies are taxes. Fines adjudicated by a court are not taxes, neither are fees
for services such as the grant of a permit by a local authority.

Although the primary purpose of a tax is to raise revenue for government expenditure, this need
not necessarily be the main purpose in order for levy to be classified as a tax.
In Northern Suburbs Cemetery Reserve Trust v Commonwealth, it was said that the laws were
made pursuant to the taxation power. If a law on its face is one with respect to taxation; the law
does not cease to have character simply because parliament seats to achieve a purpose not within
commonwealth power.
Development Data v National Petroleum Authority

What is Taxation?
Taxation is often defined as the levying of compulsory contributions by public authorities, with
power to do so, to defray the cost of their activities.
According to Section 9(1) of Revenue Administration Act (Act 915), tax means a duty, levy,
charge, rate, fee, interest, penalty or any other amount imposed by a tax law or to be collected by,
or paid to, the Commissioner General.
Morse and Williams defined tax in a three (3) characteristics. A tax is: a compulsory levy imposed
by an organ of government for a public purpose.

1. A compulsory levy: any one subject to a tax is not free to choose whether or not to pay,
hence sanctions by way of penalties and interest payments are imposed on tax defaulters.
Tax may be avoided but not evaded.
<Tax avoidance and Tax Evasion are not the same: Tax avoidance is legal, that is taking
advantage of provision in tax laws to pay the barest minimum. However, Tax Evasion is
illegal which is outright trying to avoid a tax obligation you have to discharge>
2. Imposed by an organ of government: the authority must have jurisdiction to impose the
tax.
3. For public purposes: the money collected is used for the common good, that is, for the
provision of social amenities. A tax may therefore be said to be a payment to support the
cost of government. (Fairfax v GC OFT).
Cases on Compulsory Levy:
The Constitution of Ghana gives the parliament of Ghana the sole power to impose a tax in Ghana.
Article 174 (1) - No taxation shall be imposed otherwise than by or under the authority of an Act
of Parliament. (2) Where an Act, enacted in accordance with clause (1) of this article, confers
power on any person or authority to waive or vary a tax imposed by that Act, the exercise of the
power of waiver or variation, in favour of any person or authority, shall be subject to the prior
approval of Parliament by resolution.

Victoria v Commonwealth: Requirement met if a person has no choice but to pay the charge.
MacCormick v Federal Commissioner of Taxation: Taxpayer does not need to be directly
impacted. If one person is compelled to pay a tax imposed on another person that will be sufficient.
Attorney General v Homebusb Flour Mills: Charge will be compulsory even if the statutory
scheme offers an alternative to payment, if it is a burden which the taxpayer would seek to avoid.
Cases on by a Public purpose:
Matthews v Chicory Marketing Board: a public authority for a public purpose includes statutory
authority.
Australian Tape Manufacturers Association Ltd v Cth: Public authority includes anybody
undertaking a public function. <in Ghana, the president holding public office is exempted from
paying taxes, as provided in Article 68(5) of the 1992 Const>
NOTE: Tax is “Not a fee for services”. The fee is payable by the person who receives the service.
In Mathews v Chicory Marketing Board, 'Fee for services' is not a tax, even if it is compulsory.
In Harper v Victoria: Legislation requiring payment of a fee to Egg + Egg Pulp Marketing Board
for grading, testing and marking of eggs was to defray costs of services rendered and did not
impose a tax.

Difference between Toll & Tax:

Sands v. Manistee River Imp Co: Taxes are levied for the support of government and the amount
is regulated by its necessities. Tolls are the compensation for the use of another’s properties or
improvements made by him and the amount is determined by the cost of the property or of the
improvements and considerations of the returns which such values or expenditures should yield.
Elizabeth River Crossings v Danny Meeks: Tax is an enforced contribution imposed by the
government for governmental purposes or public needs. In contrast, Tolls are user fees and are not
taxes. Tolls are not taxes because the toll users pay tolls in exchange for a particularized benefit.
The users are not compelled to pay the tolls. Tolls are collected solely to fund a particular project.
Ernest Victor Apau v UG (2014) SCGLR: Tolls are user fees, not taxes affected by article 174(1)
of the 1992 Constitution. Tolls are founded upon contract and not taxes, because element of
compulsion of payment is lacking.
Why Do We Impose Taxes? – Ali’s Taxation in Ghana
1. We impose taxes to raise revenue. It is a basis for raising revenue and to achieve national
objectives. See Articles 41 and 174 of the 1992 constitution.
2. We can use taxation to stabilize the economy: in times of unemployment, corporate taxes
could be reduced in a bid to increase retained earnings of businesses so they can expand
their operations and create jobs. This will then reduce unemployment in the economy as
the expectation is that with a reduction corporate taxes business would reinvest the
increased retained earnings in the expansion of their operations which will require more
hands increasing employment.
3. To redistribute income and wealth: through progressive taxation herein the higher
earners pay more regarding tax thus bridging the gap. Also, tax is use to provide the
services required by the low-income earners.
4. Reallocation of resources: through tax incentives, tax is used to ensure the setting up of
businesses across the country, especially where these incentives have been provided thus,
leading to the reallocation of resources. Setting up a business close to the resources has a
positive influence on other economic resources. Thus, the company having a tax incentive.
5. Use of taxation as a deflationary or inflationary device: That is to check both: use as a
fiscal tool to control the volume of money circulated. During inflations, taxes could be
increased to reduce the purchasing power hence reducing the volume of purchasing goods
and services. Reducing the pressure on prices rise thus, controlling inflation.
6. To deal with balance of payment problems: to discourage imports and encourage exports
to promote long term growth. This is done by increase in import duties, thus translating
into less demand for foreign exchange to settle import bills thus, leading to an improvement
in the balance of payments position.
7. For public purposes such as recreational centers and hospitals.

BRIEF HISTORY OF TAXATION: FROM ALI’S ARTICLE (TAXATION IN GHANA):

Upon the separation of the Gold Coast from the Sierra Leone money was required for governance
the first income tax was introduced in the GC in 1943. An attempt to introduce direct tax in 1931
was resisted on the ground that there could be no taxation without full electoral representation.
Due to the change in the demand and pricing of cocoa, a change in the economic and the political
atmosphere in the GC, the opposition to the bill was no longer pushed thus the income tax
ordinance in 1943 no 27) cap 27. This was amended and consolidated in the income tax decree of
1966. Further amended into the income tax decree of 1965 SMCD 5 which was repealed by the
internal revenue Act 2000 Act 592.
There is a tax administration bill to create a single entity for the collection of tax. There is
confusion surrounding basis of liability to Ghana income tax. This is attributed to the fact that the
tax ordinance from which most of Ghana’s present income tax is derived was based on the English
income tax acts which were in force in the UK in 1943. The ordinance was a carbon copy of the
1922 tax model ordinance prepared for the colonies.
What is the source of power to impose a tax?
No common law or equitable rule exists to make a person liable to pay tax. Thus, tax is a creation
of legislation & imposed by statute. This fact is recognised by governments & they vest such power
in themselves by legislation. Generally, the citizens of a country cannot be taxed unless the
constitution so provides.
The 1992 Constitution, Article 174(1) provides that - no taxation shall be imposed otherwise than
by or under the authority of an Act of Parliament.
(2) Where an Act, enacted in accordance with clause (1) of this article, confers power on any
person or authority to waive or vary a tax imposed by that Act, the exercise of the power of waiver
or variation, in favour of any person or authority, shall be subject to the prior approval of
Parliament by resolution.
(3) Parliament may be resolution, supported by the votes of not less than two-thirds of all members
of Parliament, exempt the exercise of any power from the provisions of clause (2) of this article.
[The provisions call for circumspection on the part of parliament especially Article 174(3) since
a wrongful exercise of the prerogative can lead to a fiscal enclave for a category of tax payers.
Also, Taxes a subject to judicial interpretation and review thus, taxes which originate as economic
instrument must assume a legal cloak of statute before they become enforceable.]
Though, parliament is central to the imposition of taxes.
<Even Military regimes vest the power of taxation in themselves>

CLASSIFICATIONS OF TAXES
We can classify taxes on the basis of the:
1. Tax base.
2. Impact and incidence
3. Incidence on the tax payer
Tax base refers to the activities which go to the subject of the tax i.e. the activities for which the
tax is imposed.
• income Tax
• Capital gains tax
• Consumption tax eg VAT’
 • Other basis – direct and indirect taxes.
• Ratio of the tax to the quantum of money, which is the tax payer’s income. – progressive
regressive and proportional taxes,

Incidence on the Tax Payer or Classification based on the ratio of the tax to the amount of
money the taxpayer has:
Progressive Tax: A tax is progressive when the ratio of tax liability to income raises as the income
raises. That is, taxing a greater percentage of income as income increases.
Proportional taxes: refer to a constant ratio of tax for all tax payers. E.g corporate tax. It is a flat
ratio for every tax payer. This was preferred by Adam Smith and this system work on the principle
of diminishing marginal utility.
A regressive tax regime: is one in which the tax ratio falls as the income increases. You pay less
as the income increases and very evident in indirect tax.
[Income (y) = consumption(c) + savings(s)]

Impact and Incidence classification (Direct and Indirect taxes):

Impact here means that the legal obligation (of a person) for paying the tax and Incidence means
that the one who bears the financial burden. That is, incidence means the ultimate economic
burden.
Direct Taxes: taxes on income are levied directly on the chargeable person, be it individuals or
companies. The impact and the incidence on tax is on the person whom accrues the income. Eg
income tax by the domestic tax div. of the GRA
Indirect Taxes: this is on expenditure through production and consumption. Levied on ownership
of goods and service. They are said to be indirect in that the impact is on the person immediately
paying the tax whereas the incidence is on another. Eg VAT. There are two types of indirect tax;
specific and ad valorem.
•A specific unit tax: A unit tax is a set amount of tax per unit sold, such as a 10p tax on packets of
cigarettes.
•An ad valorem tax: an ad valorem tax is a percentage tax based on the value added by the producer.
Distinction b/n Direct taxes and Indirect Taxes
1. Direct tax is levied on income and activities conducted, whereas Indirect Taxes are levied
on product or services.

2. In case of Direct Tax, the incidence or the burden cannot be shifted. But the burden of tax
under the Indirect Tax can be shifted.
 3. Direct Tax is paid by person concerned whiles Indirect Tax is paid by one person but he
recovers the same from another person i.e person who actually bears the tax ultimate
consumer.

4. Direct Tax is paid after the income reaches in the hands of the taxpayer. But Indirect tax is
paid before goods/services reaches the taxpayer.

5. Direct Tax collection is difficult and liable to evasion, but, Indirect Tax collection is
relatively easier and they are hidden in the commodity.

6. A direct tax touches only a section of the community. It is not having wider coverage.
The tax belt is very narrow in the case of direct taxes. In case of Indirect Tax, it has a
wider coverage for collection.

7. In case of Direct tax, taxpayer and tax-bearer is one person and the same person (impact
and incidence reside in one person). In case of Indirect Tax, taxpayer with impact is not
the same as tax payer with incidence.

8. Examples of Direct Taxes: Income Tax, Wealth Tax, GRA, Gift Tax. Examples of Indirect
Taxes: Duty Sale Tax, VAT, Service Tax, Entertainment Tax, GST.

EQUITY RULES AND ADAM SMITH’S CANONS/PRINCIPLES OF A GOOD TAX

SYSTEM.
A good tax system needs to have these four features:
1. Equity: the imposition must be equitably done. A tax system is good if it is fair and just.
The question on fairness is not settled. That is, what is fair can be ascertain using the benefit
and the ability to pay principles. Therefore, the two schools of thought on fairness are:

Benefit principle simply implies pay should be based on the benefit that the individual
obtains from the government i.e. the goods and services. Under the benefit approach, taxes
are treated as payment for goods and services. Whereas the ability to pay principle has
nothing to do with goods and the services provided but rather the tax is equitable when
levied according to a defined tax capacity or ability to pay of individual and groups.
2. Economy of collection/Administrative Efficiency: that is, economy of collection should
not exceed amount gained. More so, a good tax system is the one that has institution to
project the cost that government would get and spend.
3. Certainty: that is, the person being taxed must know that he is being taxed. The tax system
must be clearer to the taxpayer. That is, when, where, and how the tax ought to be paid.
4. Convenient of Payment: A good tax system is one that the tax regime of the government
does not overburdening the taxpayer. Burdening the taxpayer may collapse business.
Modern principles of tax system:
• The distribution of the tax burden should be equitable so that everyone is made to pay his
fair share; that is those with the broadest shoulders should be made to bear the heaviest
burden.
• Taxes should be chosen so as to minimize interference with economic decisions. Taxes
should be neutral with a minimal excess burden.
• At the same time taxes may be used to correct inefficiencies in the private sector provided
they are suitable instruments for doing so.
• The tax structure should facilitate the use of fiscal policies for stabilization and growth
objectives.
• The tax system should permit efficient and non-arbitrary administration and it should be
understandable to the tax payer.
• Administrative and compliance cost should be as low as possible and be compatible with
other objectives.
• Tax should be convenient and internationally competitive.
NOTE: there are horizontal and vertical equities. With horizontal, all those within the same
capacity sphere pay equal tax (that is ability to pay); and with vertical, people with different
capacities pay different taxes pay unequal taxes.

SOURCES OF TAX LAW

1. The Constitution
2. Act of Parliament
3. Case Laws
4. Practice Note: that is the power of the tax commissioner to impose tax. Example is the
Commissioner of Ghana Revenue Authority (GRA).
5. International Treaties
6. Soft Law

INCOME AS A TAX BASE

London County Council v AG: Income tax, if I may be pardoned for saying so, is a tax on income.
It is not meant to be a tax on anything else. It is one tax, not a collection of taxes essentially distinct.
A tax base is the asset, transaction, profit or other things which is liable for tax.
-Income is what the law deems to be income - (IRC v Rolls Royce)
-In Ghana, income tax comes from three (3) sources: Business, Employment and investment.
Pool v Guardian Investment Trust: If the amounts received by the tenant for life are profits of
trade, for which the company is liable to income tax, they form part of his income for tax purposes
whether received in cash or in shares in another company.
Pool v Guardian Investment Trust: the words Capital, Income, and Assets may have different
legal and popular meanings.
Income as an economic concept:
Adam smith views income as a tax base with a varied emphasis including income from rent and
profit. He excludes gift, windfall or capital gains to be taxable income. To smith national income
is a money measure of the overall annual flow of goods and service in the economy while land,
labour and capital are measure of the net result of economic activity.
Irvin Fischer viewed income as expenditure a factor of consumption. Thus, argues the need to tax
spending and leaving out savings and capital appreciation. This view is supported by Calder who
believes income is insoluble and best determined by expenditure. Haig and Simon view income as
the money value of the accretion to one’s economic power between two points. Simon equates
personal income with the algebraic sum of consumption and changes in net worth.
Haig and Simon define income as the money value of net accretion to one’s economic power
between two points in time: (a) money itself or (b) anything susceptible of valuation in terms of
money
Income as a legal concept.
This is determined mainly by the courts. And so is what income tax is. In London County Council
v. Attorney General [1901], Lord Macnaghten ‘income tax was, if I may be pardoned for saying
so is tax on income.’
Due to development of taxes that which is not income, income tax today should be tax on income
and that which the law deems to be income as held in IRC v ROLLS ROYCE
The distinction between income and capital and between revenue receipts and capital receipts.
In Pool v Guardian Investment Trust Co Ltd; the distinction was made as follows ‘As Mr.
Justice Pitney points out in giving the judgment of the Supreme Court of the United States, at page
206 of the Report, the fundamental relation of capital to income has been much discussed by
economists, the former being likened to the tree or the land, the latter to the fruit or the crop; the
former depicted as a reservoir supplied from springs, the latter as the outlet stream to be measured
by its flow during a period of time. He cites on the subsequent page various definitions, one of
which was that income may be defined as the gain derived from capital, from labour or from
both combined, and points out that the essential matter is that income is not a gain accruing
to capital but a gain derived from capital.’
The importance of this distinction is noted in Jeffs (Inspector of Taxes) v Ringtons Ltd as follows
‘the question—revenue expenditure or capital expenditure—is a question which is being
repeatedly asked by men of business, by accountants and by lawyers. In many cases the answer
is easy; but in others it is difficult. The difficulty arises because of the nature of the question. It
assumes that all expenditure can be put correctly into one category or the other; but this is simply
not possible. Some cases lie on the border between the two; and this border is not a line clearly
marked out; it is a blurred and undefined area in which anyone can get lost. Different minds may
come to different conclusions with equal propriety. It is like the border between day and night, or
between red and orange. Everyone can tell the difference except in the marginal cases; and then
everyone is in doubt. Each can come down either way. When these marginal cases arise, then the
practitioners—be they accountants or lawyers—must of necessity put them into one category or
the other; and then, by custom or by law, by practice or by precept, the border is staked out with
more certainty. In this area, at least, where no decision can be said to be right or wrong, the only
safe rule is to go by precedent. So the thing to do is to search through the cases and see whether
the instant problem has come up before. If so, go by it. If not, go by the nearest you can find.’
It must be noted that items of capital nature can be taxed in an income tax statute. In James v
Inland Revenue Commissioners [1977], Slade J opined that nothing stops the legislature from
imposing taxes under what name and by reference to what formula it pleases.
JURISDICTION OF GHANA RE3VENUE AUTHORITY (GRA)
Ghana’s tax statute is territorial, thus, all income arising in Ghana is liable to tax. And foreign
income is taxable only if the recipient is resident in Ghana or the law deems such income as taxable
notwithstanding its source. To tax income there must be some connection between the state and
the person’s income earned.
Ghana Revenue Authority is the only institution in Ghana to administer tax.
Section 1 of Revenue Administration Act (Act 915) provides that the Ghana Revenue Authority
is responsible, through the Commissioner-General, for administering and giving effect to tax laws
in accordance with the provisions of the Ghana Revenue Authority Act, 2009 (Act 791).

Statute: Income Tax Act 2015 (Act 896)

On Chargeable Income:
Section 1- Imposition of income tax – Charging Section
(1) Income tax is payable for each year of assessment by
(a) a person who has chargeable income for the year; and
(b) a person who receives a final withholding payment during the year.
(2) The amount of income tax payable by a person for a year of assessment is the total of the
amounts payable under subsection (1).
Section 2—Chargeable Income
What is chargeable income? Section 2(1) of Act 896 provides that the chargeable income of a
person for a year of assessment is the total of the assessable income of that person for the year
from each employment, business or investment less the total amount of deduction allowed that
person under this Act.

From Section 2(1) of Act 896, income tax in Ghana is from three (3) sources:
1. Employment
2. Business
3. Investment
Section 2(2) provides that a person who determines the chargeable income of that person or of
another person shall, determine chargeable income from each source separately.

Section 3—Assessable income

What is Assessable Income? Section 3(1) of Act 896 provides that the assessable income of a
person for each year of assessment is the income of that person from any employment, business or
investment.

Section 3(2) of Act 896 - The assessable income of a person for a year of assessment from any
employment, business or investment is
(a) in the case of a resident person, the income of that person from each employment, business or
investment for the year, whether or not the source from which the income is derived has ceased;
and
(b) in the case of a non-resident person,
(i) the income of that person from the employment, business or investment for the year, to the
extent to which that income has a source in this country; and
(ii) where the person has a Ghanaian permanent establishment, income for the year that is
connected with the permanent establishment, irrespective of the source of the income.
(3) The income of a person from an employment, business or investment has a source in this
country if the income accrues in or is derived from this country.
(4) A person who is determining the assessable income of that person or of another person shall,
determine the assessable income for each class of income separately.

NB: assessable income depends on the resident status of the person.

Distinction B/n Assessable income and Chargeable Income:
From the wording in sections 2 & 3 seem to lie in the fact that one considers all income from
business, employment and investment which are not statutorily exempt from tax as Assessable
Income. One can only arrive at the chargeable income if first, income from business, employment
and investment are not exempt or subject to a final withholding tax and second, provision is made
for allowable deductions and personal reliefs.

Who constitutes a Resident Person?

A person can be natural or artificial. An individual a body of persons, companies’, government of
Ghana or a political. A person is not limited to an individual in tax however, an individual is limited
to an individual.
Section 101—Resident person
(1) An individual is resident in the country for a year of assessment if that individual is
(a) a citizen, other than a citizen who has a permanent home outside of the country and lives in
that home for the whole of that year;
(b) present in the country during that year for an aggregate period of one hundred and eighty-three
days or more in any twelve month period that commences or ends during that year;
(c) an employee or an official of the Government of Ghana posted abroad during that year; or
(d) a citizen who is temporarily absent from the country for a period of not more than three hundred
and sixty-five continuous days, where that citizen has a permanent home in Ghana.
<< As resident income received in and brought into Ghana, accruing in and derived from Ghana
is taxable.>>
Chancellor, Master and Scholars of the University of Oxford v Commissioner for Inland
Revenue, Republic of South Africa (1996): On Chargeable Income
Facts: the South African tax authorities sought to assess the South African branch of the Oxford
University Press to tax on its business in South Africa.
Held: that Oxford University Press was part of Oxford University and had no independent legal
personality. The person whose liability to tax was being assessed was thus Oxford University,
which the court held to be indubitably an educational institution of a public character. <The fact
that the activities of Oxford University Press South Africa appeared commercial did not deprive
Oxford University of its exemption from tax in respect of the proceeds from the business from
South Africa.>
Kubi & Ors v Dali (1984-86) GLR: on determine whether you have a chargeable income or
taxable income.
Facts: the plaintiff was awarded damages for the loss she suffered and the destruction of her goods
and future profit through an accident.
Held: the court expressed the opinion that all income earners of certain category to pay taxes
on their earnings. It is income so long as the law impose the tax on. The court held to be
taxable. The income tax laws of Ghana imposed an obligation on all income earners of a certain
category to pay taxes on their earnings. The plaintiff fell under that category and the fact that she
had stated in her evidence that she had not been paying taxes did not absolve her from that liability.
Thus the amount of damages awarded her for loss of earnings should have taken into account the
income tax which the plaintiff would have had to pay if she had continued to trade or work. If
compensation for loss of earnings were to be assessed on the basis of gross earnings without any
diminution for income tax, an injured plaintiff would be receiving more than he would have
received if he had not been injured and so would be put in a more beneficial state. That could only
mean that the court would be calling upon the defendant in such a situation to pay the plaintiff
more than what the plaintiff would have received if he or she had remained able to carry on his or
her trade. And that would be against all principles of justice. The figures awarded for loss of future
earnings would therefore be reduced by the income tax eligible on them.
Government of India v Taylor
Facts: The Government of India sought to prove in the voluntary liquidation of a company
registered in the United Kingdom but trading in India for a sum due in respect of Indian income
tax, including capital gains tax, which arose on the sale of the company’s undertaking in India.
Held: claims on behalf of a foreign State to recover taxes due under its laws were unenforceable
in English courts, and there was no valid distinction for this purpose between foreign States and
State adhering to the British Commonwealth.
Clarks v Oceanic Contractors
Facts: A foreign company which was not resident in, but maintained places of business within the
United Kingdom, engaged personnel (United Kingdom residents and others) to work on barges
and other vessels in the United Kingdom sector and other sectors of the North Sea. The employees
were paid in U.S. dollars by cheques drawn in Brussels on a New York bank account. Cheques
might be (a) deposited in a bank designated by the employee, (b) seat to any person designated by
the employee or (c) delivered to the employee himself on his barge or vessel.
Held: The House considered the principle of statutory interpretation that a statute should be
confined to the territory within which it operates.
The Source Rule:
Ghana’s income tax jurisdiction is basically source i.e. it is the source which determines the
jurisdiction to tax. It also means that tax is imposed only on income having its source in Ghana so
that foreign income is taxed only when remitted to Ghana - brought in or received in Ghana. This
is the case since Ghana’s income tax jurisdiction is not global or nationality as it is in the case of
the United States of America. It further means that only that portion of a whole income earned
abroad which is brought into or received in Ghana that is liable to tax. Any portion remaining
outside cannot be taxed in Ghana.
>> Commissioner of Taxation v Kirk: the principle is that “derived from” is synonymous with
“accruing in” and “arising”. See section 3(3) of Act 896
>> Commissioner for Inland Revenue v. Lever Bros & Unilever: Source of income is the same
as originating cause of income.
>>When a source of income ceases to exist, there is no basis upon which income tax may be
imposed - Bennet v. Ogston
>>It is also well settled that the source of income and the place from which it is derived are the
same (Per Lord Atkin in Liquidator, Rhodesia Metals Limited (in liquidation) v. Commissioner
of Taxes, what constitutes the source of receipts is not “the quarter whence they came, but the
originating cause of their being received as income, and that originating cause is the work which
the tax-payer does to earn them, the quid pro quo which he gives in return. [The source of an
income and the place from which it is derived are the same]

Bennet v Marshall: Regarding employment income the source of income is where the contract
was completed and not where it was rendered.
Facts: In that case the taxpayer was employed by an American company. He resided in England
and his duties were to supervise sales of the American company in all countries except U.S.A. and
Canada. His place of employment was the office of the American company in Ohio and he was
paid there by crediting his bank in Canada.
Held: It was held that the source of his income was Canada because it was there that his income
really came to him.

BUSINESS INCOME SOURCE

What constitutes business income in Ghana?
Whenever faced with a tax problem you need to determine the type of income it is. For every
income has its deductions. For instance, employment income does not permit deduction for
transportation to work.
Business income is defined under sections 5 and 133 of Act 896
Section 5 of Act 896 provides that the income of a person from a business for a year of assessment
is the gains and profits of that person from that business for the year or a part of the year.
Section 133 of Act 896 defines business to include a trade, profession, vocation or isolated
arrangement with a business character.
 Trade:
Any income from trade constitutes business income. The word trade is very difficult to define.
Therefore, look at the circumstances to determine if the activity is a trade and then determine if it
matches us what we know.
As Lord Denning said in Harrison Ltd. v. Griffiths: But we are hard pressed to define it. Short
of a definition, the only thing to do is to look at the usual characteristics of a "trade" and see
how this transaction measures up to them. Usually in trade, the trader makes many trading
transactions. But that is not essential. An isolated transaction may do. Usually the object of the
trader is to make a trading profit. But that is not invariable…
Ransom v. Higgs [1974]: – Lord Wilberforce: Trade involves, normally, the exchange of goods,
or of services, for reward, not of all service, since some qualify as a profession, or
employment, or vocation, but there must be something which the trade offers to provide by way
of business. Trade, moreover, presupposes a customer (to this too there may be exceptions, but
such is the norm), or, as it may be expressed, trade must be bilateral, you must trade with someone.
Sharkey v Wernher: Where a trader takes stock from his business for private use or for use in
another business which he owns, or where he transfers to his business stock which he owns in
some other capacity than that of proprietor of that business, the transfer should be dealt with for
taxation purposes as if it were a sale or purchase at market value. Thus, goods that a trader takes
from his trading stock, for example, for the personal use and enjoyment of himself and members
of his household, should be credited at market value.
Kowloon Stock Exchange Ltd v IRC: Lord Brightman. – refers to the buying and the selling
of goods. The word 'trade' is no doubt capable of bearing a variety of meanings according to the
context in which it is used.
Marson v Morton: Remember there is no definition for trade. It can only be measured up against
some known characteristics.
Badges of Trade by the Radcliff Royal Commission on the Taxations:
1. Subject-matter,
2. Period of ownership,
3. Frequency of transactions,
4. Supplementary work,
5. Circumstances of realization, and
6. Motive
NB: that these badges are not arguably conclusive, and one badge is enough to determine a trade
for taxation.
(1). Subject-Matter: this badge proceeds on the assumption that every item is capable of being a
subject matter of trade, (every property can be traded in). Thus, everything can be used to
determine subject-matter of trade, whether tangible or intangible. Accordingly, the thing form the
basis of the transaction.
In Rutledge v IRC, the taxpayer was a moneylender while abroad bought a large quantity of toilet
roll, which on his return to the United Kingdom he sold in a single purchase and made a profit of
£10, 000.00. In holding that he was in an adventure in the nature of trade Lord President Clyde
said that the taxpayer made himself liable for the purchase of the vast amount of toilet paper
obviously for no other purpose than that of selling and making a profit.
Johnston v. Heath: subject-matter of land for transaction
Facts: The taxpayer was employed as a manager by a company which carried on business as
building and engineering contractors. He did not have any financial interest in the company.
Taxpayer did not have the means to purchase 6 1/4 acres of land offered to him. He therefore
entered into a contract with a buyer to sell the land before he accepted the offer to buy the land
himself.
Held: It was held that this was an adventure in the nature of a trade, especially in view of the fact
that he had contracted to sell the land before he entered into a contract to buy it.
(2). Period of Ownership: here, the determination is that how long the tax payer has held on to
the property that constitutes subject-matter. Generally, property meant to be traded is normally
realized within a short time after the acquisition. Period of ownership depends on the factual
situations. But there are many exceptions to this rule.
Take it as, if you have owned something for a long time, it is much easier to justify that you bought
it for its enjoyment or for your own private consumption. A profit on sale would not therefore be
treated as a trading profit. If however you have only owned it for a short period it is much more
likely that Commissioner of Tax could successfully argue that it was purchased with the aim of
selling it at a profit.
In Turner v. Last, Cross J. said: of course, the mere fact that when you buy your property, as
well as intending to use and enjoy it, you have also in your mind the possibility that it will
appreciate in value, and that a time may come when you will want to sell it and make a profit on
it, does not of itself make you a trader; but if the position is that you intend to sell it as soon as
possible to recover the cost of purchase, the position is obviously different. Held that from the
facts the party intended to sell the field thus, was trading.
In Marson v Morton, the land was owned by the taxpayer for three months, their intention for
acquiring the land was for it to serve as an investment. From the circumstances of the case, it
was held that they were not trading because the land was bought as a long-term investment
by people who did not regularly invest in them and was sold as a whole.
(3). Frequency of Transactions: the frequency of the transaction is essential in determining if
the activity is a trade. The frequency of the transaction helps to indicate if it is a trade. Thus, if
you buy and you dispose it off that is what traders do. <Under the frequency of transactions, we
look at the number of times the person has traded or engaged in the transactions regarding the
subject-matter or realization of same type of property occurring in succession over a period of
time>
Leach v Pogson
Facts: the taxpayer had started a driving school. Which was successful and he later sold. He
subsequently set up 30 driving schools and sold them. The special commissioners held that the
receipts of all the sales were receipts of trade. On the appellant contended that the first was not of
the same character as the later.
Held: it was held that the Commissioners decision was correct and that they were entitled to take
subsequent events into account.
Martin v Lowry: in which the taxpayer bought 44 million yards of aircraft linen although he had
not previously been involved in linen trade. He could not sell the entire stock in one transaction
so he set up a selling organization to dispose of them, which took him a year to sell and made a
profit of 1.6 million pounds. The House of Lords held that he was trading.
Pickford v Quirke: A single transaction can amount to a trading activity, it is more
indicative if there are repeated and systematic transactions
Facts: A syndicate purchased a cotton-spinning mill with the intension of using it in a trade,
however, on purchase of the mill it was in a worse state than first anticipated. The syndicate then
decided to strip the mill of its assets and sell it piecemeal, making a profit. This was repeated a
number of times with a number of mills.
Held: due to the repeated nature of the transactions it was held that the profits were trading
profits and taxable as such.
(4). Supplementary Work: Working on property in a way to bring it to a more marketable
condition/special exertion made in attracting purchasers. <Determination of tax is done by
enhancing whether the tax payer has done some works>
Cape Brandy Syndicate v IRC, where three wine merchants bought a quantity of brandy,
blended it with other brandy, and sold the new blend over several months. It was held that they
were trading.
(5). Circumstances of Realization: there may be some explanation, such as sudden emergency
or opportunity calling for ready money which negatives the idea that any plan of trading
prompted the original purchase. <So here, determination is done by what the transaction>
In West v Philip, the taxpayer was a builder. He built some houses for sale and was assessed to
tax, and later built others for rental. Due to government rent control measures he sold the houses
built for rental. It was held that whereas the houses built for sale were properly assessed the
houses built for rental were not as they were not connected with his trading activities.
(6) Motive: there are many cases in which the purpose of the transaction of purchase and sale is
clearly discernable. Motive is never irrelevant. <So here, the determinant is what was the
purpose or intent of the tax payer to engage in such transaction>
In IRC v Reinhold, the taxpayer bought four houses and resold them three years later at a profit.
He admitted he had bought the property with a view to resale, and instructed his agents to do so
if a good opportunity arose. The Commissioners were equally divided and allowed an appeal by
the taxpayer against assessment. Held: It is enough for the revenue to show that the subjects
were purchased with the intention of realizing them some day at a profit.
In Salt v Chamberlain, a research consultant made a loss on the stock exchange after trying to
forecast the market. The loss was made after several years and over 200 transactions. This was
not seen as trade and capital in nature. It was concluded that share trading by a private individual
can never have the badges of trade pinned to them. The transactions are subject to capital gains
tax.

Profession or Vocation
Profession: Involves the idea of an occupation which requires an intellectual skill/any manual
skill controlled by an intellectual skill operator as observed by Scrutton J in IRC v. Maxse
In IRC v Maxse, the sole proprietor who was the taxpayer was assessed for tax with regards to
excess profit tax. He contended that he played the role of the profession as such he was exempted
by section 39 (c). It was held, in this case, three main profession – church, medicine and the
law. These were the first profession in the world.
Vocation: the way a man passes his life [Patridge v. Mallendine]
Profits from Illegal Activities
The Act 896 does not distinguish between legal gains or profits and illegal gains or profits.
Mann v Nash: Rowlatt J “It is also said that the State are coming forward to take a share in the
profits of unlawful gaming. That is mere rhetoric. The State is doing nothing of the kind. It is
merely taxing the individual with reference to certain facts. It is not a partner or a sharer in the
illegality.” So it was held that it was held that once transactions were considered trading, the
fact that the trade was illegal could not prevent assessment to tax.
Hayes v Duggan [1929]: where the Irish Court took the view that the illegality of an activity can
affect its taxability.
In IRC v Aken, proceeds from prostitution taxable; where following a television appearance
by a prostitute known as ‘Lindi St Claire’, the Inland Revenue made inquiries into her income
resulting in assessments for a six-year period amounting to a total of £58, 751 in tax. The
taxpayer argued that her activities as a prostitute involved illegality and should not be taxed. The
argument was not accepted and the assessment was upheld.
>> The position is that the crime is not asked to go unpunished but, what we claim is that so long
as you receive income you must pay the tax be it illegal or otherwise.
Profits Realized in the course of discontinuing a Trade:
In IRC v Nelson, a Whisky Broker was compelled through ill health to close his business. He
closed his bank account, instructed his Accountant to wind up business and notify his creditors
and customers. Within a few days one of his customers purchased the business including a stock
of whisky, which was its principal asset. It was held that this was not a sale in the course of
trade but after cessation of the business. And that the profit on the sale was not assessable to tax
as a profit from trading.

EMPLOYMENT INCOME
What is Employment?
According to Section 133 of Act 896 “employment” means
(a) a position of an individual in the employ of another person;
(b) a position of an individual as manager of an entity other than as partner of a partnership;
(c) a position of an individual entitling the individual to a fixed or ascertainable remuneration in
respect of services performed; and
(d) a public office held by an individual;

Section 4 of Act 896 provides that employment is the gains and profits of that individual from
the employment for the year or a part of the year.

Gains/profits = allowances/benefits paid in cash or given in kind to, or on behalf of, that person
from that employment – section 4(2)(a).
Employment Income include Sec 4 (2)(a) of Act 896:
(i) salary, wages, leave pay, fees, commissions, and gratuities;
(ii) overtime pay and bonuses as provided by Regulations;
(iii) personal allowances, including cost of living allowance, subsistence, rent, entertainment or
travel allowance;
(iv) a discharge or reimbursement of an expense incurred by an individual or an associate of the
individual;
(v) a payment made for the individual’s agreement to conditions of the employment;
(vi) subject to section 94, a retirement contribution made to a retirement fund on behalf of an
employee and a retirement payment received in respect of an employment;
(vii) other payments, including gifts, received in respect of the employment;
(viii) other amounts required to be included under Part III; and
(ix) any other allowance or benefit paid in cash or given in kind if they are derived by the individual
during the year from the employment.
Exclusion/Exemption Sec 4 (2)(b) of Act 896:
• An exemption under section 7
• A final withholding tax payment
• Reimbursement or discharge of a person’s dental, medical or health insurance expenses
• Where the benefit is available to all full-time employees on equal terms
• A passage to or from Ghana in respect of that person’s appointment or termination of
employment where that person (i) is recruited outside Ghana (ii) is in Ghana solely for the
purpose of serving the employer, and (iii) is not a resident of Ghana.
• The provision of on-site accommodation by an employer carrying on a timber, mining,
building, construction or farming business.
• A discharge or reimbursement by an employer of an expenditure incurred by that person
on behalf of the employer that serves the proper business purposes of the employer.
• Redundancy or Severance pay.
• Night duty allowance.
Note: that mortgage interests are not taxable, contributions to organizations, to rural projects. See
Sixth Schedule.
Three conditions to determine an employment income exit:
1. Existence of an office of employment: Section 133 of Act 986 defines employment as a
position of an individual in the employ of another person; (c) a position of an individual
entitling the individual to a fixed or ascertainable remuneration in respect of services
performed; (d) a public office held by an individual.

Office: in Great Western Railway Co. v Baxter, Rowlatt J defined Office as:
“subsisting, permanent, substantive position which has an existence independent of the
person who filled it, which went on and was filled in succession by successive holders”.

In Macmillan v Guest: office includes the position of a director in a company.

In Dale v IRC: Office includes trustee or executor.
In IRC v Brander: office includes Solicitors for registration of companies.

2. There must be payment of emoluments: according to section 4(2)(a) of Act 986, Gains
from office or employment includes salary, wages, leave pay, fees, commissions, and
gratuities. The exemptions or exclusions are in section 4(2)(b) of Act 986. See Section
4(2) of Act 986 entirely.

3. The emoluments must derive from office or employment: according to theses

Hochstrasser v Mayes, Brumby v Milner, Beecham Group v Fair; not every payment
made to an employee is necessarily made to him as a profit from his employment. To be a
 profit arising from employment, the payment must be made in reference to the services
the employee rendered by virtue of his office.

Heasnan v Jordan, a gratuity paid to an employee in 1945 for overtime during the war
years was held to be taxable when the services were rendered.

In Pickles v. Foulsham, where a contract of service was concluded in England and under it
services were to be performed in West Africa but the remuneration was paid by the employer in
England, it was held that the source of income was England.
Contrast, in Bennett v. Marshall, where the taxpayer was employed by an American company.
He resided in England and his duties were to supervise sales of the American company in all
countries except U.S.A. and Canada. His place of employment was the office of the American
company in Ohio and he was paid there by crediting his bank in Canada. It was held that the
source of his income was Canada because it was there that his income really came to him. Romer
L.J. explained that: "In the case of an employment the locality of the source of income is not the
place where the activities of the employee are exercised but the place where the contract for
payment is deemed to have a locality."
[It is submitted that these English decisions on the source of income are unsatisfactory and should
not be followed by our courts. By equating source of employment income with the locus contractus
or the place of payment, the English courts appear to attach more importance to form than to
substance. The English decisions, if followed by our courts, would mean that, for example, a
Ghanaian who spends his whole life-time working in Ghana would escape Ghana tax for the simple
and unsatisfactory reason that his contract of employment was concluded in London where he was
first interviewed by the Public Services Commission and offered an appointment.} J.E. Mills
>That an individual may hold an office or employment and carry on a profession or vocation at
the same time when both employment and profession are in the same line:
• Davis v Braith Waite: It seems to me quite clear that a man can have a profession and an
employment at the same time in different categories. A man may have the steadiest
employment in the world by day and may do something different in the evening and make
some money by the exercise of a profession or a vocation. I cannot doubt that would be so
even if it were in the same sphere, I do not see why we should not have both an employment
as well as a profession. For instance a Musician who holds employment can at the same
time follow his profession privately … I think that whatever she does and whatever
contracts she makes are nothing, but incidents in the conduct of her professional carrier.
• In Blackburn v Cross Ltd, Merchant Bankers who received allowances and fees for
performing managerial and secretarial services for companies were held to be assessable
to income tax on their profit under a trade and to employment tax in respect of their fees
and allowances.
 INVESTMENT INCOME
Section 133 of Act 896, Investment includes the owning of one or more assets of a similar nature
or that are used in an integrated fashion.
Investment Asset: Section 133 of Act 896 provides that (a) includes a capital asset held as part
of an investment being shares or securities in a company, a beneficial interest in a trust or an
interest in land or buildings, but (b) excludes the primary private residence of an individual,
provided the residence has been owned by the individual continuously for the three years before
disposal and lived in on a daily basis for at least two of those three years.
Section 6(1) of Act 896 provides an investment income is the gains and profits of that person from
conducting the investment for the year or a part of the year.
Investment income includes, Section 6(2)(a):
• dividends, interest, annuity, natural resource payment, rent, and royalty;
• a gain from the realisation of an investment asset as calculated under Part IV
• an amount derived as consideration for accepting a restriction on the capacity of the
individual to conduct the investment.
• a gift received by a person other than a gift received in respect of business or employment
Exclusions/Exemptions section 6(2)(a):
• an amount specified in respect of an exemption under section 7
• a final withholding payment
• an amount that is included in calculating the income of the person from an employment or
business.

Difference b/n Trading “with” & Trading “within” Ghana

Trading within = taxable
Trading with = not taxable

Place of Contract: place where contract was concluded [Grainger & Sons v. Gough]
Place of Operations: where do the operations take place from which the profits arise? [Smidth
v. Greenwood

ASCERTAINMENT OF ASSESSABLE AND CHARGEABLE INCOME

How to assess the gains to tax- basis of assessing income to tax
The revenue authority of every country has three functions as stated in WHITNEY v IRC:
 a. Identify the person (is he an individual, company or partnership) and his source of income
b. Then you aggregate all the sources of income.
c. Which aspects/ portion of that income is exempted from tax: after the exemption whatever
is left is subject to tax.
Chargeable Income: The chargeable income of a person for a year of assessment is the total of
the assessable income of that person for the year from each employment, business or investment
less the total amount of deduction allowed that person under this Act – section 2 of Act 896.
Year of assessment refers to the government fiscal year- Jan to December.
Chargeable income = assessable income – allowable deductions
>See section 7 of Act 896 on exemptions of income. That is, assessable income does not include
exempt income under sec 7.
Allowable deductions
This is done in two ways:
1. Individuals level
2. Corporate entities
On Corporate entities:
We have specific deduction and residual deduction
• Specific Deductions: are deductions allowed in the Act 896. That is a claim that the law,
Act 896, expressly and clearly allow the corporate entity to make deductions before
chargeable income. Example includes interest on loan, trading stock, repairs and
improvements. See sections 10 to 17 of Act 896.
• Residual deduction: this is based on ‘Wholly, Exclusively, and Necessarily’ (WEN).
WEN is a claim by the corporate entity to exclude certain amount being taxable – section
9 of Act 896.

What is outgoings and expenses wholly, exclusively and necessarily incurred in any revenue
income?
- Thus, the expenditure must be for the purpose of earning the profit from a trade,
employment or investment.
- Expenditure must be incurred wholly and exclusively and necessarily during the period
- Lastly, the expenditure must be for enduring benefit or an advantage of the business.
IRC v Carrot Co ltd: the cost of obtaining a new charter which provided a better administrative
structure for the company was held to be deductible; it was held that what matters is the nature of
the advantage for which the money was spent. This money was spent to remove restrictions which
were preventing profits from being earned, it created no new asset, and it did not open new fields
of trading which had previously been closed to the company.
In Norman v Bolder: it was held that the money incurred by the shorthand writer in recovery was
not allowable deductions.
Mitchell v Noble ltd, a lumps sum was paid to a director who though liable to dismissal agreed to
retire to avoid undesirable publicity. It was held that the lump sum payment was deductible since
it was a “payment to get rid of a servant in the interest of the trade is a proper deduction.
Anglo Persian Co ltd v Dale, a lump sum paid by a principal to his agent for the cancellation of
an onerous agreement; the payment being the course of change of the principal’s business methods
and to effect an economy in the business was allowed as deduction.
In Southern v Borax Consolidated ltd: cost incurred by a company in defending its title to certain
lands were allowed as a deduction.
Bentley & Stokes Lowless v Deeson: it was the held that the sole object of the expenditure must
be for a business purpose. The expenditure is not disqualified because the nature of the activity
necessarily involves some other results, or attainment or furtherance of the other object, since the
latter result or object is necessarily inherent in the Act. The appellant a firm of solicitors had
incurred expenses in entertaining clients at lunches during which legal advice was sometimes
given. The question arose whether such expenses were wholly or exclusively incurred for
professional purposes. The crown contended that the expenses could not be wholly divorced from
the relationship of host and guest. It was held that the expenses were allowable deductions as
the primary purpose was for business.
In Bowden v Russel & Russel: the expenditure of a solicitor who combine a law conference with
his vacation was held not to be allowable deductions.
In lucas v Cattel, the telephone installations and rental charges incurred by a clerk to an executive
council of a national health service who needed to be consulted out of hours on urgent matters was
held not to be exclusively incurred in performing the duties of his office.
Nolder v walters, a pilot’s expenses of installing a telephone, keeping a motor car, special flying
clothes, books and instruments and undergoing medical test were all instruments and undergoing
medical test were all necessarily incurred.
Wholly refers to quantum, thus, if the employee is paid a salary in excess it is not allowable
deductions in Coleman v Flood.
Summary: Expenditure must be incurred wholly, exclusively & necessarily in the production of
the income. [Bentley Stokes & Lowless v. Beeson, Bowden v. Russell & Russell, Lucas v. Cattell,
Nolder v. Walters, Norman v. Golder, Copeman v. Flood]
> It must be for the enduring benefit/an advantage of the business [Mitchel v. BW Noble]
On Travelling Expenses:
Generally, cost of travelling is deductible. However, that of travelling from home to work is not
deductible.
RICKETTS APPELLANT v COLQUHOUN RESPONDENT.
Facts: The Recorder of a provincial borough, who was a barrister residing and practising in
London, claimed to deduct from the amount at which the emoluments of his office had been
assessed for the purpose of income tax under Sch. E of the Income Tax Act, 1918, certain travelling
expenses incurred by him in travelling from London to the borough and back, and certain hotel
expenses incurred while in the borough:
Held, that the travelling expenses were attributable to the exercise by the Recorder of his own
volition in choosing to reside and practice in London, and were not expenses which he was
"necessarily obliged" to incur and defray in the performance of his duties, nor were any of the
expenses money which he was "necessarily obliged" to expend "wholly, exclusively, and
necessarily in the performance" of his duties, within the meaning of r. 9 of Sch. E; and that,
therefore, he was not entitled to deduct the expenses in question from the amount of his assessment.
>The essential element for determining whether the expenses incurred in travelling is that
deductible is to consider the base of operations of the individuals. The base herein refers to the
work place of the individuals. For the lawyer it is the chambers for instance.
NEWSON v ROBERTSON:
Facts: A barrister exercised his profession partly at his chambers in London and partly at home.
When the courts were sitting he did the greater part of his work at his chambers but at other times
he worked at home except for an occasional journey to his chambers. He claimed a deduction for
Income Tax purposes in respect of the expenses incurred in travelling between his home and his
chambers.
Held: The Special Commissioners held that expenses incurred in travelling during term time were
inadmissible as a deduction but they allowed a deduction for expenses incurred during vacation
time. Held, that the travelling expenses were not incurred wholly and exclusively for the purposes
of the profession. For the expenses covered as allowable deductions were those from his chambers
to court and etc and not from the house and to chambers.
POOK v OWEN
Facts: The taxpayer was a medical practitioner and resident at Fishguard. He held part-time
appointments as obstetrician and anaesthetist at Haverfordwest, fifteen miles away. Under his
appointments he was on stand-by duty for emergencies, as an obstetrician one weekend a month,
as an anaesthetist one weekend a month, and on Monday and Friday nights. He had to be accessible
on the telephone at those times, and on receipt of a telephone call telling him of an emergency he
would give instructions over the telephone to the hospital staff and then, usually, would set off
immediately for the hospital by car, although he might advise treatment on the telephone and await
a further report. His responsibility for the patient began as soon as he received the telephone call.
He was paid travelling expenses at a fixed rate per mile for journeys between Fishguard and the
hospital; but the travelling expenses were not payable for a single journey in excess of ten miles,
and the taxpayer bore the cost of the additional five miles himself. He was assessed to income tax
under Schedule E on the amounts received for travelling expenses as being emoluments of his
office, and he claimed to deduct from his income the expenses that he incurred in such travelling
to and from the hospital.
Held: (1) so far as the taxpayer’s actual travelling expenses were reimbursed they were not
emoluments as defined in Finance Act 1950 (c 54), Schedule 2, paragraph 1(1) (repealed) and
accordingly were not chargeable; (2) the taxpayer had, in respect of the employment in question,
two places of work, and the expenses which were necessarily incurred in travelling between them
in the performance of his duties properly fell within the scope of Schedule 9, r 7 (repealed) of the
1952 Act; accordingly the expenditure was deductible.

Medical Expenses Are Not Allowable Deductions: In Murgatroyd (H M Inspector of Taxes)

v Evans - Jackson, The Respondent carried on the profession of a trade-mark agent. He fell sick
and in order to enable him conduct his business and to receive treatment he signed up at a private
hospital wherein he conducted his business and received treatment. He sought to deduct 60% of
the medical expenses as business expenses. It was held that the expenses were of a private and
domestic nature thus, not deductible.

On Telephone Expenses: these are not deductible except when it is shown to be wholly and
exclusively related to the business conducted.
Lucas v Cattell
Facts: The Appellant was clerk to a County Executive Council of the National Health Service. In
the council's opinion it was necessary for him to have a telephone at his home in order that he
might be contacted outside normal office hours on any urgent National Health Service matters.
Before his appointment as clerk he had not had a telephone, but after being appointed he had one
installed the number of incoming and outgoing calls in connection with his employment was about
one-twelfth of the total. The cost of outgoing business calls was reimbursed by his employers, but
not that of the installation of the telephone or the rental charges. On appeal against an assessment
to income tax under Schedule E for the year 1969-70, the Appellant contended that he was required
by the council to have a telephone in order to take and make emergency calls outside office hours
and that, notwithstanding its private use, he was entitled to an allowance for the whole of the rental
as being wholly, exclusively and necessarily incurred in the performance of his duties.
Held: The General Commissioners dismissed the appeal. It was held that the cost of the rental
was not exclusively for the purpose of his business.
Expenses on Professional Services: legal and accountancy expenses incurred by a trader in
contesting the amount of an assessment to excess profits tax are not allowable as deductions in
computing profits for the purposes of a subsequent assessment to income tax or excess profits tax;
they are not "money wholly and exclusively laid out and expended for the purposes of the trade"
within r. 3 (a) of the Rules Applicable to Cases I. and II. of sch. D. to the Income Tax Act, 1918,
inasmuch as they were incurred, at any rate in part, to determine the current amount of tax and not
to earn gain.
Computation of Allowable Deductions of Individual
The revenue authority of every country has three functions as stated in WHITNEY v IRC:
a. Identify the person (is he an individual, company or partnership) and his source of income

b. Then you aggregate all the sources of income.

c. Which aspects/ portion of that income is exempted from tax: after the exemption whatever
is left is subject to tax.
>Personal Reliefs: section 51 of Act 896 provides that in arriving at the chargeable income of a
resident individual for a year of assessment under section 2, deduct the personal reliefs specified
in the Fifth Schedule.
Under Fifth Schedule:
- Individual with a dependent spouse or at least 2 dependent children = 1,200 currency (as
amended)
- Disabled Individual = 25% of assessable income from business/employment.
- Individual of 60yrs & above years deriving assessable income from business/employment
= 1, 500 currency (as amended)
- Sponsoring children or ward’s education in the registered institution in the country = 600
cedis per child, not more than 3 children, as amended
- Dependent relative other spouse/child above 60 years = 1,000 cedis to a limit of 2 for only
one spouse.
- Cost individual who has undergone training to update professional, technical or vocational
skills = 2,000 cedis
>Quantification according to market value: section 26(1)(a) a payment or an amount to be
included in income or deducted from income is quantified in the amount specified in the Fourth
Schedule.
Under Fourth Schedule:
1. Motor vehicle benefits:
- Driver & Vehicle with fuel = 12.5% to a maximum of GH¢600.00 per month
- Vehicle with fuel = 10% to a maximum of GH¢500.00 per month
- Vehicle only = 5% up to GH¢250.00 per month
 - Fuel only = 5% up to GH¢250.00 per month
2. Accommodation Benefits:
- Accommodation with furnishing = 10% of the total cash emoluments (TCE) of the
person
- Accommodation only = 7.5% of the TCE
- Furnishing only = 2.5% of the TCE
- Shared Accommodation = 2.5% of the TCE

FORMAT FOR ASSESSMENT OF EMPLOYMENT INCOME

Name of Taxpayer:
Year of Assessment:
Basic Period:

Annual Basic Salary =

Add:
Cash allowances (if any)
Total Cash Emolument (TCE) =

Add Benefits
Rent Element (if applicable)
Car Element (If applicable)

Assessable Employment Income = TCE + Rent Element + Car Element

Chargeable Income = Assessable income – Personal Reliefs

Example 1:
AJ Amoako was appointed Managing Director of Saks Limited on a salary of GHS 68,000 a year
with effect from 1st Jan 2020. In addition to his salary, he is entitled to the following allowances:
a. Responsibility allowance – GHS 680 per month
b. Inconvenience Allowance – GHS 920 per month
 c. Risk Allowance – GHS 800 per month
The company provided him with furnished accommodation at Golden Gate, on the Spintex Road
in Accra, and also a car with free supply of fuel. He used the car for both business and private
purposes.
He is married and has three children. His eldest son is studying medicine at Marymount University
in USA. His other son is in St. Augustine’s College in Cape Coast and his daughter is in Corpus
Christi Junior Secondary Sch in Sakumono, Accra.
He maintains all the children in addition to a 50 year old-mother. He contributes 5.5% of his salary
to social security.
As a solicitor, you have been instructed by Mr. Amoako to compute his income tax for 2020. In
addition, you are required to legally justify the treatment of each transaction.
The applicable tax rates are as follows:
Chargeable income (GHS) Rate
First 3,828 Nil
Next 1,200 5%
Next 1,400 10%
Next 36,000 17.5%
Next 197,532 25%
Exceeding 240,000 30%

Computation of Mr. Amoako’s Income Tax:

Name of Tax Payer: AJ Amoako
Year of Assessment: 2020.
Basis period: 1st Jan to 31st Dec

>Annual Basic Salary: GHS 68,000

>Add Cash Allowances:

Responsibility Allowance = 680 x 12 = GHS 8,160
Inconvenience Allowance = 920 x 12 = GHS 11,040
Risk Allowance = 800 x 12 = GHS 9,600
>Total Cash Emolument = 68,000 + 28,800 = GHS 96,800
>Add Benefits in kind:
Furnished accommodation= 10% = 10% / 100% x 96,800 = GHS 9,680
Vehicle & Fuel = 10% not exceeding GHS 500 = 500 x 12 = GHS 6,000
Total benefits = GHS 15,680

>Assessable Income = TCE (96,800) + Total Benefits (15,680) = GHS 112,480

>Personal Reliefs:
Responsibility = GHS 1,200
Children Education = GHS 1,200
SSNIT Contribution = 5.5% = 5.5/100 x Basic Salary (68,000) = GHS 3,740

>Total Reliefs = GHS 6,140

>Chargeable Income = Assessable income – Personal reliefs

= 112,480 – 6,140
= GHS 106, 340

C.I (GHS) Rate C.I (106,340) Tax Payable

First 3,828 Nil 106,340- 0
3,828=102,512
Next 1,200 5% 102,512- 60
1,200=101,312
Next 1,440 10% 101,312- 144
1,440=99,872
Next 36,000 17.5% 99,872- 6,300
36,000=63,872
Next 197,532 25% 63,872 15,968
Exceeding 240,000 30
Total Tax
Payable = GHS
22,472.

Income Tax payable by Mr Amoako = GHS 22,472.

Legal Justification:
No common law or equitable rule exists to make a person liable to pay tax. Thus tax is a creation
of legislation and imposed by statute. This fact is recognised by governments and they vest such
power in themselves by legislation. Generally, the citizens of a country cannot be taxed unless the
constitution so provides. Thus, the 1992 Constitution, Article 174(1) provides that - no taxation
shall be imposed otherwise than by or under the authority of an Act of Parliament. Furtherly,
Ghana’s income tax system is a source rule. Article 41(j) of the 1992 Constitution of Ghana
provides that it is the duty of every citizen of Ghana to declare his income honestly to the
appropriate and lawful agencies and to satisfy all tax obligations. Moreover, section 1 of Act 896
provides that income tax is payable for each year of assessment by a person who has chargeable
income for the year. Furtherly, sections 2 and 3 of Act 896 provide for the chargeable income and
assessable income of a person for a year of assessment from employment, business or investment.
As a result, Mr Amoako’s income comes from his employment and it is accruing in or derived
from, as section 3(3) of Act 896 emphasizes.
Thus, in respect of section 101 of Act 896, Mr Amoako is a resident person of Ghana and his
source of income is the employment, as IRC v Whitney also emphasized. Therefore, Section 4 of
Act 896 provides that employment is the gains and profits of that individual from the employment
for the year or a part of the year. Mr Amoako is a tax payer and liable to pay tax, as section 9(3)
of Revenue Administration Act (Act 915). highlights. Accordingly, a tax, section 9(1) of Revenue
Administration Act, is a duty, levy, charge, rate, fee, interest, penalty or any other amount imposed
by a tax law.
Regarding the computation of Mr Amoako’s income tax, section 18 of Act 896 provides for the
year of assessment and basis period for a person. Therefore, from the facts, the tax payer is (Mr
Amoako), the year of assessment is (2020) and the basis period is (1st Jan to 31st Dec). Moreover,
therefore, from his appointment as a MD of Saks Ltd, his annual basic salary is (GHS 68,000).
Concerning the Cash Allowances, section 4(2)(a) of Act 896 provides that personal allowances
and other allowances are included for calculation of income tax from an employment for a year of
assessment. Thus, from the facts, he was given a responsibility Allowance of GHS 680 per month
(GHS 8,160); he was also given inconvenience Allowance GHS 920 per month which stands at
(GHS 11,040) for a year. So as risk allowance GHS 800 per month at (GHS 9,600). Therefore
Total Cash Emolument is (GHS 96,800).
On the benefit in kind, section 4(2) and section 26 of Act 986 further provides that benefits in kind
are included for calculation. Therefore, the amounts or rate to be included are specified in the
Fourth Schedule of the Act. And from the facts, Mr Amoako was given a furnished accommodation
and it is quantified under the fourth schedule at (10%) of TCE. Therefore, it gives us (GHS 9,680).
Furthermore, he was given vehicle and fuel, and under the fourth schedule it is quantified at (10%
not exceeding GHS 500). Therefore, 500 x 12 gives us (GHS 6,000). Thus, the total benefit is
(GHS 15,680).
From section 3 of Act 896, Mr Amoako’s Assessable Income is the addition of the TCE (96,800)
and Total Benefits in Kind (15,680), and this gives us a sum of (GHS 112,480).
Moreover, form the facts, Mr Amoako has personal reliefs and section 51 of Act 8966 provides
that in order to arrive at chargeable income, personal reliefs of that resident individual must be
deducted. Thus, the allowable deduction for Mr Amoako’s personal relief are provided in the Fifth
Schedule. First, Mr Amoako is married but the facts do not expressly state that he is a dependent
spouse. Therefore, dependent spouse is excluded in the calculation of his income tax. Accordingly,
he a responsibility relief of (GHS 1,200). On the children education, even though he has three
children but the law will cater for only two as the other child is not in any public education in the
country. And per the as amended, GHS 600per child, therefore, (GHS 1,200). Also, in Ghana,
contributory pension scheme is mandatory for employee and employer. According to the Pensions
Act (sections 1 and 63 of Act 766), every employee must pay SSNIT Contribution of (5.5%) of
the Basic Salary, which is mandatory and constant rate for every employee. Therefore, form the
basic salary of Mr Amoako (68,000), the SSNIT deduction is (GHS 3,740). Thus, his total reliefs
is (GHS 6,140).
Therefore, in accordance with section 2 of Act 896 on chargeable income, MR Amoako’s
chargeable income is Assessable income minus allowable Personal reliefs (GHS 106, 340),
(Allowable deductions). Furthermore, in order to arrive at computation of his income tax, section
1 of Act 896 directs to use Schedule One of the Act (graduated rates) on his chargeable income.
Therefore, following the rates, Mr Amoako ought to pay (GHS 22,472) as tax from his annual
basic salary of (GHS 68,000).

Example 2:
Name of Tax Payer: Mr Abu
Year of Assessment: 2020
Basic Period: 1st Jan to 31st Dec

>Annual Basic Salary = GHS 80, 000

>Add Cash Allowances:

Responsibility Allowances = 400 x 12 = GHS 4,800
Entertainment Allowances = 700 x 12 = GHS 8,400
Risk Allowances = 600 x 12 = GHS 7,200
>Total Cash Emolument (TCE) = GHS 100, 400
>Add Benefits in kind:
Furnished Accommodation = 10% = 10%/100% x 100,400 = GHS 10040

>Assessable Income = TCE (100400) + Benefits in Kind (10040) = GHS 110,440

>Personal Reliefs:
SSNIT Contribution = 5.5% = 5.5% / 100% x Basic Salary (80,000) = GHS 4,400

Dependent of above yrs = GHS 1,000

Total Reliefs = GHS 5,400

>Chargeable Income = Assessable Income – Reliefs

= 110,440 – 5,400
= GHS 105,040
 INTERPRETATION OF TAX STATUTE
The general rule for interpretation is that the words must be given their ordinary meaning. This
meaning must serve the object of the statute. Also, statutes must be read as whole to obtain the
true meaning of the words used in the context. There must be a contextual approach to the
interpretation of the words.
In interpreting or constructing a statute, we seek to ascertain the meaning, the scope and the legal
effect of the statutes i.e. the provisions in the statute.
There are different rules for interpreting a statute. That is to say the approaches used in giving
meaning to statutes differ.
Each approach has its own ideological basis. That is the approaches are informed by certain ideas
and depending upon the approach which is being used, you may find a court being more
interventionist in construing a statute or being a laid backed in construing a statute.
The interventionist role is played when the statute is absurd, thus, seeking to give a reasonable
meaning to the statute.
The laid-back court does not consider himself clothed with power to question the absurdity.
Whenever, you apply a rule of interpretation, presumption or aid then you are engaged in an
interpretive exercise.
Aid – ejusdem generis, nosciatur a sociis –
Tax law is a special law
Strict Constructionist Approach (Literal Approach)
>The preferred rule is literal approach interpretation.
Multichoice Ghana Ltd. v The Commissioner, Internal Revenue Service (2011) SCGLR
Facts: The appellants, a pay television company, broadcasts programmes to its customers, as is to
be expected, not gratuitously, but for subscription fees. For the period 1994-1999, it deposited its
revenue generated by way of subscription fees in an interest income yielding account, and earned
profits thereon. The respondents describe the profits so earned as colossal. Nonetheless, the
appellant claimed per its financial statement for each fiscal year that, it recorded losses in respect
to its business. The legitimate question is how did this come about? The appellant company arrived
at this conclusion by grossing up income from the television business proper and the interest earned
on the subscription fees and deducting all allowable heads of expenses wholly incurred in its main
line television business to declare the net losses. Whether the appellant company operated two
separate business lines, run two separate sources of income and therefore "entitled to deduct
expenses wholly, exclusively and necessarily incurred in its Television business, as a source of
income from another source of income, namely interest income."
Held: My conclusion has been dictated by the strict constructionist approach to the interpretation
of statutes reserved for fiscal legislation. The general principle is that tax statutes are to be
construed strictly. Viscount Simon LC in the Privy Council case of Canadian Eagle Oil Company
Limited and The King [1946 AC 119 at 140] relied on Rowlatt J’s formulation of the rule in Cape
Brandy Syndicate v IRC [1921 1KB 64, 71]. He observed: "In the words of the late Rowlatt J
whose outstanding knowledge of this subject was coupled with a happy conciseness of phrase, "in
a taxing Act one has to look merely at what is clearly said. There is no room for any intendment.
There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing
is to be implied. One can only look fairly at the language used."

IRC v Duke of Westminster: Doctrine of Substance of the matter or over form

Facts: The Duke’s gardener was paid weekly, but to reduce tax, his solicitors drew up a deed in
which it was said that the earnings were not really wages, but were an annual payment payable by
weekly instalments.
Held: To find out what the true relationship was and what the true nature of these payments were,
you had to look at the deed.
Tomlin L said: ‘it is said that in revenue cases there is a doctrine that the Court may ignore the
legal position and regard what is called ‘the substance of the matter’, and that here the substance
of the matter is that the annuitant was serving the Duke for something equal to his former salary
or wages, and that therefore while he is so serving, the annuity must be treated as salary or wages.
This supposed doctrine…seems to rest for its support upon a misunderstanding of language used
in some earlier cases. The sooner this misunderstanding is dispelled, and its supposed doctrine
given its quietus, the better it will be for all concerned, for the doctrine seems to involve
substituting ‘the in certain and crooked cord of discretion’ for ‘the golden and straight met
wand of the law’. Every man is entitled if he can to order his affairs so that the tax under a tax
statute is less than it would otherwise be. If he succeeds in ordering them so as to secure this result,
then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may
be of his ingenuity, he cannot be compelled to pay an increased tax. This so called doctrine of ‘the
substance’ seems to me to be nothing more than an attempt to make a man pay notwithstanding
that he has so ordered his affairs that the amount of tax sought from him is not legally claimable.’
and ‘Whatever the substance of the arrangements may have been, their fiscal effect had to be in
accordance with the legal rights and obligations they created.’
<<Doctrine of Substance over form allows the Commissioner to ensure that financial statements
given by the taxpayer gives a complete, relevant, and accurate picture of transactions and events.
Thus, it allows the Commissioner of tax to ignore an arrangement’s legal form and examine its
actual substance with the aim of preventing artificial structures from be used to avoid paying taxes.
This takes its root form Gregory v Helvering>>
In IRC v Longmans Green: the court held that the courts will not construe the machinery section
to defeat the purpose of the charging section or a charge to tax.
Purposive Approach and Modern Approach:
Modern purposive approach to statutory interpretation has been applied to tax statutes.
Rather than focusing on the words, it involves construing a statute, the meaning, scope and or legal
effect of the statute, in a manner that is in line with the purpose and the context of the statute. It
includes commentary, memorandum and Hansard of the Statute.
Find the legislative purpose construe the enactment in a manner in line with the purpose same with
the context.
What is the purpose? Ascertained by reading the memorandum and the preamble – i.e. the
legislative intent.
Section 10 of Interpretation Act 2009 provides the considerations and grounds for the
interpretation of tax statute. From the provisions of section 10, the courts are not limited to literal
approach on interpretation. The court can consider purposive approach to a tax statute.
WT Ramsay Ltd v IRC
Facts: The taxpayers used schemes to create allowable losses, and now appealed assessment to
tax. The schemes involved a series of transactions none of which were a sham, but which had the
effect of cancelling each other out.
Held: If the true nature of the transactions could be seen by looking at them all together, then that
should be done. If the composite transaction produced neither a gain nor a loss, it was a nullity.
The schemes should be ignored as artificial and fiscally ineffective. The language of a taxing
statute will often have to be given a wide practical meaning to allow the court to have regard
to the whole of a series of transactions which were intended to have a commercial unity.
Lord Wilberforce (on the interpretation of taxation statutes) ‘What are ‘clear words’ is to be
ascertained upon normal principles: these do not confine the courts to literal interpretation. There
may, indeed should, be considered the context and scheme of the relevant Act as a whole, and its
purpose may, indeed should, be regarded.’ As to the construction of composite transactions: ‘It is
the task of the court to ascertain the legal nature of any transaction to which it is sought to attach
a tax or a tax consequence and if that emerges from a series or combination of transactions,
intended to operate as such, it is that series or combination which may be regarded.’ and ‘The
capital gains tax was created to operate in the real world, not that of make-belief . . . To say that a
loss (or gain) which appears to arise at one stage in an indivisible process, and which is intended
to be and is cancelled out by a later stage, so that at the end of what was bought as, and planned
as, a single continuous operation, there is not such a loss (or gain) as the legislation is dealing with,
is in my opinion well and indeed essentially within the judicial function.’

Pepper v Hart
Facts: The House of Lords had to decide whether a teacher at a private school had to pay tax on
the perk he received in the form of reduced school fees. The teacher sought to rely upon a statement
in Hansard made at the time the Finance Act was passed in which the minister gave his exact
circumstance as being where tax would not be payable. Previously the courts were not allowed to
refer to Hansard.
Held: The House of Lords departed from Davis v Johnson and took a purposive approach to
interpretation holding that Hansard may be referred to and the teacher was not required to pay tax
on the perk he received.
Lord Griffiths on the purposive approach: “The days have passed when the courts adopted a
literal approach. The courts use a purposive approach, which seeks to give effect to the purpose of
legislation and are prepared to look at much extraneous material that bears upon the background
against which the legislation was enacted.”
Lord Brown Wilkinson on reference to Hansard: “My Lords, I have come to the conclusion
that, as a matter of law, there are sound reasons for making a limited modification to the existing
rule (subject to strict safeguards) unless there are constitutional or practical reasons which
outweigh them. In my judgment, subject to the questions of the privileges of the House of
Commons, reference to Parliamentary material should be permitted as an aid to the construction
of legislation which is ambiguous or obscure or the literal meaning of which leads to an absurdity.
Even in such cases references in court to Parliamentary material should only be permitted where
such material clearly discloses the mischief aimed at or the legislative intention lying behind the
ambiguous or obscure words. In the case of statements made in Parliament, as at present advised
I cannot foresee that any statement other than the statement of the Minister or other promoter of
the Bill is likely to meet these criteria.”

Mangin v IRC: Lord Donovan considered the rules for interpretation of taxation statutes and said:
First, the words are to be given their ordinary meaning. They are not to be given some
other meaning simply because their object is to frustrate legitimate tax avoidance devices
… Secondly, ‘one has to look merely at what is said. There is no room for any intendment.
Moral precepts are not applicable to the interpretation of revenue statutes. There is no
equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is
to be implied. One can only look fairly at the language used’. Thirdly, the object of the
construction of a statute being to ascertain the will of the legislature, it may be presumed
that neither injustice nor absurdity was intended. If, therefore, a literal interpretation
would produce such a result, and the language admits of an interpretation, which would
avoid it, then such an interpretation may be adopted. Fourthly, the history of an
enactment and the reasons, which led to, it being passed, may be used as an aid to its
construction.

Barclays Mercantile Business Finance Ltd v Mawson: On Modern Approach

Facts: The Company had paid substantial sums out in establishing a gas pipeline, and claimed
those sums against its tax as capital allowances. The transaction involved a sale and leaseback
arrangement which the special commissioners had found to be a pre-arranged series created only
for a tax advantage, and the judge at first instance agreed saying there had been no up-front finance
such as would be usual. The Court of Appeal allowed the taxpayer’s appeal, and the revenue now
appealed.
Held: The statutory requirements are in the case of a finance lease concerned entirely with the acts
and purposes of the lessor. The arrangements made satisfied the statutory requirements, and the
appeal was dismissed.
The House described the general form of tax evasion attempts: ‘structuring transactions in a form
which will have the same or nearly the same economic effect as a taxable transaction but which it
is hoped will fall outside the terms of the taxing statute. It is characteristic of these composite
transactions that they will include elements which have been inserted without any business or
commercial purpose but are intended to have the effect of removing the transaction from the scope
of the charge.’
Lord Nicholls of Birkenhead removed the interpretation of taxing statutes from its literalist
enclave and incorporated it into the modern approach to statutory interpretation which the court
otherwise adopts: ‘The essence of the new approach was to give the statutory provision a purposive
construction in order to determine the nature of the transaction to which it was intended to apply
and then to decide whether the actual transaction (which might involve considering the overall
effect of a number of elements intended to operate together) answered to the statutory description.

The charging section refers to the provisions which impose the tax. Whereas the machinery
provides for the rules of collecting and computing tax.

TAX AVOIDANCE AND TAX EVASION

Resistance to tax is of two main kinds. These are tax evasion and tax avoidance.
Tax Avoidance means paying the barest minimum of tax or avoiding payment of tax. This is legal.
Professor Quitcroft, Tax avoidance is “the act of dodging tax without breaking the law.”
Tax evasion means that when the taxpayer intentionally fails pay tax burden imposed on him by
law. This is illegal.
In Barclays Mercantile Business Finance Ltd v Mawson: The House described the general form
of tax evasion attempts: ‘structuring transactions in a form which will have the same or nearly the
same economic effect as a taxable transaction but which it is hoped will fall outside the terms of
the taxing statute. It is characteristic of these composite transactions that they will include elements
which have been inserted without any business or commercial purpose but are intended to have
the effect of removing the transaction from the scope of the charge.’
Ayrshire Pullman Motor Services v IRC: Tax avoidance is the “legal methods, claiming the
permissible deductions and credits, which individuals or companies may use to modify their
financial situations in order to lower the amount of the tax owed”.
Lord Reid in Greenberg v IRC expressed similar sentiments, quite properly using the word
‘evasion’ to describe legal (or, in modern parlance, ‘avoidance’) transactions: ‘We seem to have
travelled a long way from the general and salutary rule that the subject is not to be taxed except by
plain words. But I must recognise that plain words are seldom adequate to anticipate and forestall
the multiplicity of ingenious schemes which are constantly being devised to evade taxation.
Parliament is very properly determined to prevent this kind of tax evasion…’
Lord Clyde in Ayrshire Pullman Motor Services and Ritchie v IRC stated the legal position in
relation to tax: ‘No man in this country is under the smallest obligation, moral or other, so to
arrange his legal relations to his business or to his property as to enable the Inland Revenue to put
the largest possible shovel into his stores. The Inland Revenue is not slow – and quite rightly – to
take every advantage which is open to it under the taxing statutes for the purpose of depleting the
taxpayer’s pocket. And the taxpayer is, in like manner, entitled to be astute to prevent, so far as he
honestly can, the depletion of his means by the Inland Revenue.’
Tax Avoidance
Section 34 of Act 896 provides that “tax avoidance” includes an arrangement, the main purpose
of which is to avoid or reduce tax liability.
“Arrangement” includes an action, agreement, course of conduct, promise, transaction,
understanding or undertaking, which is (a) express or implied;
Anti-Tax Avoidance Provisions
Section 34(1) of Act 896 provides that for purposes of determining a tax liability under this Act,
the Commissioner-General may re-characterise or disregard an arrangement that is entered into or
carried out as part of a tax avoidance scheme.
(a) which is fictitious or does not have a substantial economic effect; or
(b) whose form does not reflect its substance.
Section 99(1) of Act 915 provides that despite any provision in a tax law, where the
Commissioner-General is of the opinion that a person might otherwise secure a tax benefit under
a tax avoidance arrangement, the Commissioner-General may adjust the tax liability of that person
in a way that the Commissioner-General considers appropriate to counteract the tax benefit.
Section 99(5) of Act 915 provides that an arrangement is a “tax avoidance arrangement” only if
it involves a misuse or abuse of a tax law provision having regard to the purpose of the provision
and the wider purposes of the law in which the provision is situated.
Eaton Towers Ghana Ltd v The Commissioner General & AG: On Tax Avoidance
Facts: The CG embarked on a tax audit on the Appellant for the period 2013 to 2016 culminated
in the upward adjustment of the Appellants assessable income from its Vodafone operations and
consequently its direct and indirect tax liabilities for the period. Dissatisfied with this assessment
the Appellant wrote to the CG on 6 December 2017 and in accordance with section 42(5) (b) of
Act 915 requested a waiver of the required upfront payment of 30% of the tax assessed which is a
pre requisite for its assessment. The appellant submits that the 1 Respondents finding of the
Appellant as engaging in a tax avoidance scheme solely on the ground that Appellant charged
Vodafone low prices for the use of its own towers as compared to charges levied other sharers on
the towers [referring to Airtel, MTN and other entities sharing the masts with Vodafone]. The
Appellant argues that this cannot form the basis of a claim of tax avoidance under section 112 of
the Internal Revenue Act 2000 [Act 592], section 34 of the Income tax Act, 2015[Act 896] or
section 99 of the Revenue Administration Act, 2016 [Act 915], adding that there is nothing
fictitious or artificial in its agreement with Vodafone. The Appellants argument here is that its
arrangement with Vodafone does not achieve any tax benefits as would be caught under section
99[4] of the Revenue Administration Act, 2016 [Act 915]. The 1 Respondent argues that Appellant
in its submission that that it offered additional services of rental which comprises the exclusive
allocation of tower space arguing that the Appellant did not provide a breakdown of charges for
the various services as it would be seen from them such a differential which tilted in favor of the
Vodafone and this cannot be justified economically except it being a tax avoidance.
Held: that the agreement may be convenient to the parties but works to the disadvantage of the
taxman. This arrangement blocks income which otherwise should come to the Appellant. This in
turn will squeeze and lower the corporate income tax that Appellant ought to pay to the 1
Respondent. In other words any arrangement that aims at reducing income to that entity ends up
reducing corporate income tax. The Income Tax Act, 2015 (Act 896) section 34, Revenue
Administration Act, 2016(Act 915) section 99, and the Value added Tax Act, 2013(Act 870)
sections 43[1], [2] and [3] in their combined effect empower the commissioner to re
characterize the arrangement having noted that by that arrangement what is due it from the
services rendered by the Appellant was reduced and thereby avoiding the payment of the
right taxes. <It is this arrangement which is discriminatory and in favor of Vodafone. This
arrangement beneficial to the parties, is not favorable to the 1 Respondent as it reduces his tax
revenue. The law recognizing such situations are likely to arise provides at section 34 of the
Income tax Act, 2015 (Act 896) the power for the Commissioner General to disregard or to re
characterize any arrangement which is fictitious or does not have a substantial economic effect or
whose form does reflect its substance.>

Income Splitting
Income splitting includes transfers of income or assets (including money) to an associate that result
in the transferee receiving or enjoying the income from that property in order to reduce the
combined tax liability of the transferor and transferee. Income splitting is not permitted under the
laws of Ghana.
Section 32 of Act 896 provides that:
(1) Where a person attempts to split income with another person, the Commissioner-General may,
by notice in writing to that person, prevent a reduction in tax payable.
(2) The Commissioner-General may, in the notice referred to in subsection (1),
(a) adjust the amount to be included in or deducted from income for the purpose of calculating the
income of each person; or
(b) re-characterise the source and type of any income, loss, amount or payment.
(3) A reference to a person attempting to split income includes a reference to an arrangement
between associated persons,
(a) for the transfer of an asset, directly or indirectly, including the transfer of an amount derived;
(b) where the transferor retains legal or implicit right to benefit from the asset currently or in the
future; and
(c) where one of the reasons for the transfer is to lower the tax payable by an associated person.
So, where a person attempts to split income with another person, the commissioner of the GRA
may adjust the chargeable income of both persons or re-characterise the source and type of any
income, loss, amount or payment to prevent a reduction in tax payable as a result of the splitting
of income.
A person is treated as having attempted to split income where that person transfer an asset, directly
or indirectly, to an associate, and where the transferor retains the legal or implicit right to benefits
from the asset and one of the reasons for the transfer is to lower the level of tax payable by the
transferor or an associated person.

Thin Capitalisation:
This refers to the proportion of debt financing. When the debt to equity ratio is 3:1 or more, the
company has thin capitalization.
Section 33 of Act 896 provides that:
(1) Where a resident entity which is not a financial institution and in which fifty percent or more
of the underlying ownership or control is held by an exempt person either alone or together with
an associate has a debt-to-equity ratio in excess of three-to-one at any time during a basis period,
a deduction is disallowed for any interest paid or foreign currency exchange loss incurred by
that entity during that period on that part of the debt which exceeds the three-to-one ratio, being
a portion of the interest or loss otherwise deductible but for this subsection.
(2) For purposes of this section,
“exempt person” means
(a) a non-resident person;
(b) a resident person for whom interest is paid by a resident entity to an exempt person or for whom
a foreign exchange gain realised with respect to a debt claim against the resident entity
(i) constitutes exempt income; or
(ii) is not included in ascertaining the exempt assessable income of that person; and
(c) “resident entity” means a resident partnership, resident company, resident trust or permanent
establishment of a non-resident person in the country.
The above means that where a company has a debt to equity ratio of 3:1, and a foreign company
and its associates hold majority interest, GRA will disallow part of interest and foreign exchange
losses for tax, the portion disallowed is that part which exceeds the 3:1 debt-equity ratio.
Thus, thin capitalization is a tax avoidance scheme to reduce the tax base. Therefore, section 33 of
Act 896 has the relevance of reducing the erosion of profits when the majority owners are non-
resident. Such companies may not deduct the full interest incurred when computing taxes.
NB: thin capitalization does not apply to financial institutions.
Section 10 of Act 896 provides on the interest as: interest incurred by a person during a year of
assessment under a debt obligation of the person is incurred in the production of income to the
extent that (a) where the debt obligation was incurred in borrowing money, the money is used
during the year or was used to acquire an asset that is used during the year in the production of the
income; and (b) the debt obligation was incurred in the production of income in any other case.

-From the provisions in section 33 on Thin Capitalization, the ratio is 3:1; and interest on debt is
allowed to be deducted by the company or person.
For example: Avumegah Ltd is a subsidiary of non-resident company (PKAO Companies).
Avumegah’s Ltd total capital requirement is GHC 150,000. A non-resident company invests
GHC30,000 and the company borrows GHC 120,000 from the related party at an interest rate of
30%. Profit before interest for the year is GHC 50,000. The debt to equity ratio is 4:1. The Comm-
General has the power under Section 33 of Act 896 to disallow GHC 9,000 which is ¼ of the loan
interest. He will add this back and tax it.
The thin capitalization rule affects subsidiaries of international firms. These companies use a mix
of equity, short-term credits and long-term debt. Tax authorities scrutinize transactions b/n
international companies and the subsidiaries.
Why the scrutiny? The parent company has control or influence over the decisions of its
subsidiaries. Transactions b/n the two may not be at market prices. It is for this reason that the
Commissioner General scrutinize financing arrangements b/n such entities.
Perseus Mining Ghana Ltd v The Comm General (2021): on income splitting – avoidance
Facts: the Commissioner found out that Perseus used two different standards in the payment of
royalties to their third company, Franco Vevada Corporation and that used in computing the
royalties due the government of Ghana. Perseus also used the spot gold prices whilst they used the
contract price for the Gov of Ghana. Therefore, there were discrepancy in its trading and taxes to
the gov. Perseus was unable to proof its burden.
Held: that the Commissioner was right to re-characterise the transactions of the applicant (Perseus)
and the Commissioner was right to treat the forward sales contracts or hedging arrangements as a
tax avoidance arrangements.
Cases:
Vestey v IRC: Taxes are imposed upon subjects by Parliament. A citizen cannot be taxed unless
he is designated in clear terms by a taxing Act as a taxpayer and the amount of his liability is
clearly defined. A proposition that whether a subject is to be taxed or not, or, if he is, the amount
of his liability, is to be decided (even though within a limit) by an administrative body represents
a radical departure from constitutional principle. It may be that the revenue could persuade
Parliament to enact such a proposition in such terms that the courts would have to give effect to it:
but, unless it has done so, the courts, acting on constitutional principles, not only should not, but
cannot, validate it. When Parliament imposes a tax, it is the duty of the commissioners to assess
and levy it upon and from those who are liable by law. Of course they may, indeed should, act
with administrative commonsense.
Pattington v Attorney General: If the subject comes within the letter or the law he must be taxed,
however great the hardship may appear to be. On the other hand, if the Crown, seeking to recover
the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently
within the spirit of the law the case might otherwise appear to be. If there be admissible, in any
statute, what is called an equitable construction, certainly such a construction is not admissible in
a taxing statute, where you can simply adhere to the words of the statute.
Re Westons Settlements
Facts: The settlor applied for the approval of an arrangement for the export of his trust to Jersey,
where he had gone to live. The court considered its powers under the 1968 Act.
Held: The court should not consider merely the financial benefit to the infants or unborn children,
but also their educational and social benefit. There were many things in life more worthwhile than
money. In this case, his Lordship found that it was not for the benefit of children to be uprooted
from England and transported to another country simply to avoid tax.
Lord Denning MR said: ‘In exercising its discretion, the function of the court is to protect those
who cannot protect themselves.’ The proposed variation was not for the benefit of the specified
class and the court refused to approve it.
Beneficiaries who are sui juris and together absolutely entitled to the trust property have the right
to defeat the intention of the settlor by varying or revoking the trust as they see fit.
P.C Appiah Ofori v AG (2010) SCGLR: I would reiterate, as already noted, that in the context
of this case, it is the objective purposive construction which must be deployed. I have had occasion
to fully examine the marked difference between the subjective and objective purposive
construction, also known as the strained-and-purposive based construction.
Agyei-Twum v AG (2205-6) SCGLR: “The concept of the purpose of a constitutional provision
reveals that there are two kinds of purpose: subjective and objective. The subjective purpose is
what the framers of the Constitution actually intended. The objective purpose, on the other hand,
is what the provision should be seeking to achieve, given the general purpose of the Constitution
and the core values of the legal system and of the Constitution. In other words, it is the purpose
that a reasonable person would have had if he or she were faced with formulating the provision in
question. In Asare v Attorney-General [2003-2004] 2 SCGLR 823, this court held that, in
determining the purpose of a provision, the interpreter should balance the two kinds of purpose.
The spirit of a constitutional provision includes its objective purpose.” Per Date-Bah

TAX ADMINISTRATION
Here, we are looking at the implementation of tax laws by the GRA.
Tax administration has been described by Professor Shoup as the key to tax policy. Generally, a
tax administrator sets as his goals the efficient assessment, collection and enforcement of taxes
legally due, without undue cost to the government or the taxpayer in terms of money, time or
convenience. The objectives necessary to achieve these goals are:
(a) To facilitate and encourage voluntary compliance with the requirement of the tax laws;
(b) To deter tax evasion and avoidance;
(c) To maintain public confidence in the integrity of the tax system; and
(d)To administer tax legislation fairly, uniformly and impartially as well as with diligence,
courtesy and efficiency.

Duty or Task of the GRA

• Assessment
• Collection
• Enforcement

Divisions of the GRA

1) Domestic Tax Division
2) Support service division
3) Customs divisions
In dealing with taxes, the GRA has divided the taxpayers into 3:
i. Large Taxpayers
ii. Medium Taxpayers
iii. Small Taxpayers

Center for Juvenile Deliquency v Ghana Revenue Authority & AG: On Tax Administration
Facts: The plaintiff, Center for Juvenile Delinquency ("C") is a Ghanaian Non-Governmental
Organisation. The Revenue Administration Act, 2016 (Act 915) ("RAA") since its passage in 2016
required a person to obtain a Taxpayer Identification Number (TIN) before they could bring a case
before any Court in Ghana. C held that this provision was an infringement on the fundamental
human rights of a person to freely access the Ghanaian justice system and be heard in Court on
any matter. The first defendant, the Ghana Revenue Authority ("G"), contended that this provision
was merely an administrative and regulatory one similar to the payment of filing fees prior to
access to the Courts, and was not in any way meant to contradict any provisions of the Constitution.
G further argued that TINs were a measure to ensure tax compliance, and were readily obtainable
at no cost or delay. The second defendant, the Attorney General ("A), argued that C had not
properly invoked the original jurisdiction of the Supreme Court since C's claim of an infringement
of fundamental human rights was "flawed and misconceived". G and A made a further claim that
a juvenile is not liable to pay tax, and therefore does not need a TIN, in addition to the claim that
a juvenile could not even access the Courts on their own, except through a guardian, who will be
the one required to obtain a TIN.
Held: On the issue of whether the provisions of the RAA which required a person to have a TIN
prior to accessing the Courts were a contravention of the 1992 Constitution's provisions, the Court
held in favour of C, that the Constitution, in keeping with the principle of 'the Rule of Law', ensures
that all persons are equal before the law, including providing for equal access to the Courts as
under Article 17. The judge noted that the free right of access to the Courts was so basic and
necessary if a person were to enjoy all the other fundamental human rights and freedoms in the
Constitution. It was therefore held that no matter what benefit the issuance of TINs brought to G
and the Government in terms of tax revenue, that benefit could never outweigh the importance of
the basic right of a person of access to the justice system. The Court therefore declared as
unconstitutional, void and of no effect, the provisions of the RAA on the need for a TIN before
access to the Courts. Accordingly, the relevant paragraphs in the RAA's 'First Schedule' that
provided for this requirement were struck down by the Court.

Methods and time for payment:

Section 113(1) of Act 896 provides that Tax imposed under section 1 is payable
(a) by withholding
(b) by instalment
(c) on assessment
These are the means or methods by which taxes may be paid by the taxpayer.

Section 113(2) provides the time for provides that Tax is payable:
(a) In the case of tax payable by withholding, at the time provided for in section 117;
(b) In the case of tax payable by instalment, on the date by which the instalment is to be paid under
section 121.
(c) In the case of tax payable on assessment, on the date by which the return of income is filed
under section 124.
>Section 113(2)(d) indicates the time GRA can ask a person to pay outstanding tax.

Withholding Tax:
This means that the process the recipient agent must pay the applicable tax on behalf of a corporate
entity. The recipient is the withholding agent.
Section 117(1) of Act 896 provides that a withholding agent shall pay to the Commissioner-
General within fifteen days after the end of each calendar month a tax that has been withheld
in accordance with this Division during the month.
(2) A withholding agent shall file with the Commissioner-General within fifteen days after the end
of each calendar month a statement in the form prescribed, specifying
(a) payments made by the agent during the period that are subject to withholding under this
Division;
(b) the name, address and tax identification number of the withholdee;
(c) tax withheld from each payment; and
(d) any other information that the Commissioner-General may prescribe.
Beiersdorf Ghana Limited v The Commissioner-General: On withholding tax
Facts: BGL challenged an additional tax assessment of GHS1, 085, 392 raised after the GRA
conducted an audit on its activities for the 2014 to 2016 financial years. According to BGL's notice
of appeal, it disagreed with the following aspects of the assessment: (1) Royalty payments under
a distribution licence agreement being disallowed as deduction; (2) Reimbursements for work done
by third party vendors being reclassified as sales commission subject to 10% withholding tax; and
(3) Treating trade discounts being reclassified as commission payments subject to 10%
withholding tax. In respect of the first ground of appeal, the GRA contended that a distribution
licence agreement entered into between BGL and its German parent company, which includes
royalty payments for the use of the Nivea trademark in Ghana, is a "technology transfer agreement"
as defined by the Ghana Investment Promotion Centre (GIPC) Act, 2013 and accordingly, should
be registered as such with the GIPC. As BGL failed to effect the required registration, the royalty
payments were not recognised as deductible expenses in the hands of BGL. BGL held that two
different types of payments were made to distributors dispensing Nivea products in branded stands
and display cases at retail outlets. Firstly, a service fee is paid to the distributor and, secondly, out-
of-pocket expenses incurred by the distributor, including payments to tradesmen who manufacture
display cases, and acquire branding materials, are reimbursed. Although BGL admitted that the
service fee paid should be subject to withholding tax, it argued that the reimbursement of
distributor costs should not attract withholding tax.
Held: However, the court held that the reimbursements should attract withholding tax on the basis
that, if BGL were to make payments directly to the relevant tradesmen, they would be subject to
withholding tax and routing the payment through the distributors does not remove that obligation.
Taylor & Taylor Ltd v The Commissioner-General: on Withholding Agent
Facts: There was a contract between the appellant and the Ministry of Health. According to the
Respondent, under Sections 84(2) and 87 of the Internal Revenue Act, 2000 (Act 592), the Ministry
of Health as withholding agent was obliged to withhold a percentage of the gross amount payable
and pay same over to the Respondent as tax due and payable by the taxpayer which happened to
be the Appellant.
Held: It was the duty of the Ministry of Health to withhold the tax and then pay same to the
Respondent. Failing which the Respondent was to take steps to recover it from the Ministry of
Health which in turn would have the liberty to recover same from the Appellant. The Respondent
however chose to take the withholding tax from the Appellant. In any case, the withholding tax
payment was the responsibility not for the Appellant, but for the Ministry of Health and
Respondent had no business exacting same from the Appellant. Moreover, the demand for
withholding tax request should have been served on the Ministry of Health in the first instance and
not on the Appellant. The Appellant could not be made liable to the claim for withholding tax. The
Respondent in its letter to the Governor, Bank of Ghana and the actions taken thereon were not in
consonance with Act 592. These were acts of self-help and should be deprecated. Indeed, the court
regards the Respondent’s conduct with grim disfavour as its behavior smacked of capriciousness.

Instalment:
Section 121(1) of Act 896 - An instalment payer shall pay tax by quarterly instalments if the
person derives or expects to derive assessable income during a year of assessment
(a) from a business or investment, or
(b) from an employment where the employer is not required to withhold tax under section 114.
(2) An instalment payer shall pay tax in instalments:
(a) where the basis period of that instalment payer is a twelve month period beginning at the start
of a calendar month, on or before the last day of the third, sixth, ninth and twelfth months of the
basis period;
(b) in any other case, at the end of each three-month period commencing at the beginning of each
year of assessment and a final instalment on the last day of each year of assessment, unless it
coincides with the end of one of the three month periods.
Section 122(1) of Act 896 provides that person who is an instalment payer for a year of assessment
under section 121 shall file with the Commissioner-General by the date for payment of the first
tax instalment an estimate of tax payable for the year.

Assessment:
Section 124(1) of Act 896 provides that Subject to section 125, a person shall file with the
Commissioner-General not later than four months after the end of each basis period a return of
income for the year.
(2) A return of income of a person for a year of assessment shall, subject to any instructions by the
Commissioner-General to the contrary;
(a) be in the prescribed form and specify
(i) the assessable income of the person for the year from each employment, business and
investment and the source of that income;
(ii) the chargeable income of the person for the year and the tax payable with respect to that income
under section 1(1)(a);
(iii) tax paid by the person for the year by withholding, instalment or assessment for which a tax
credit is available under section 120 or 121.
Types of Assessment
Self-Assessment:
Section 126 provides that a return of income filed under section 124 shall result in a self-
assessment.
See section 34 of Act 915

Adjusted Assessment: Section 37 of Act 915 provides that

(1) Assessment of tax is made by way of
(a) self-assessment, where a person is obliged to file a tax return; and
(b) the Commissioner-General making an assessment in other cases, including where a self-
assessment is adjusted.
(3) The Commissioner-General may adjust an assessment.
(4) The Commissioner-General may make an assessment at any time, including an adjusted
assessment where the Commissioner-General discovers a case of fraud, wilful default or serious
omission by or on behalf of a taxpayer.

Original Assessment: is the assessment to tax that the GRA makes for the taxpayer and does not
based on self-assessment.

Pre-emptive Assessment: that is proactive action of the Commissioner on the taxpayer.

Section 38 of Act 915 provides that:
(1) The Commissioner-General may, in the circumstances specified in section 28 (3), make a pre-
emptive assessment of tax payable or to become payable by a person under a tax law whether or
not the person is required to file a tax return.
(2) The Commissioner-General may, instead of making a preemptive assessment, accept from a
person security for outstanding and future tax liabilities as the Commissioner-General considers
appropriate.
(3) The Commissioner-General shall use best judgement and information reasonably available in
making a pre-emptive assessment or fixing the amount of security.
Section 28 of Act 915 provides that:
(3) The Commissioner-General may, by notice, require a person to file a tax return if before the
date for filing of tax returns
(a) the person becomes bankrupt, is wound-up or goes into liquidation; or
(b) the Commissioner-General believes on reasonable grounds that the person
(i) is about to leave the country indefinitely;
(ii) is otherwise about to cease activity or business in the country; or
(iii) has committed an offence under a tax law; or
(c) the Commissioner-General considers it appropriate, including where the person fails to
maintain adequate documentation as required under section 27.

In the BGL Case: the court ruled that, in terms of High Court Order 54 rule 1 and 2, in order for
the court to hear an appeal against a tax assessment, the appellant is required to pay at least a
quarter of the assessment payable in the first quarter of the year of assessment and file proof of the
payment with its Notice of Appeal.
Republic v CIT, ex parte National Employers Mutual General Insurance Association
Facts: The National Employers Mutual General Insurance Association Ltd. applied for certiorari
to quash the tax assessments for 1962-63 to 1970-71 accounting years levied on them in 1971 and
the notice of refusal to amend the said assessments. The application, it was alleged, was founded
on error of law in that, inter alia, the Commissioner of Income Tax failed to give consideration to
the law and fact that the society was a guaranteed mutual and non-profit making insurance
company which did not trade or engage in business and thus did not earn income and therefore not
liable to payment of income tax.
Held: the concept of an inferior tribunal was not a derogatory one but merely referred to the limited
nature of a tribunal's jurisdiction, as was the case of the Tax Commissioner. The superior courts
of Ghana specified in the Constitution, 1979, art. 114 (5) did not include the Tax Commissioner's
tribunal and furthermore, the fact that a tribunal exercised certain powers of a High Court and
appeals from its decision laid to the Court of Appeal did not mean such decisions were that of a
High Court so as to put the tribunal within the category of superior courts.
In Michael Dane v CIT, the government issued a statement that no foreigner should do diamond
business. The Taxpayers were at Akim Oda where the Diamond Board had a list with names of
persons who sold diamond to the Board were entered, which included the name of the taxpayer.
He was therefore assessed to tax and the notice was served on him by registered post. The taxpayer
objected that he was not served and the receipt of the slip was produced and his objection was
struck out…
Notice of Assessment
Section 40 of Act 915 provides that:
(1) Where the Commissioner-General makes an assessment under a tax law, the Commissioner-
General shall serve a written notice of the assessment on the taxpayer.
(2) In addition to any requirement of the tax law in question, the Commissioner-General shall, in
the notice of assessment, state:
(a) the name of the taxpayer;
(b) the Taxpayer Identification Number of the taxpayer;
(c) the assessment by the Commissioner-General of the tax payable by the taxpayer for the period,
event or matter to which the assessment relates;
(d) the amount of tax remaining to be paid after any relevant credits, reductions or pre-payments;
(e) the manner in which the assessment is calculated;
(f) the reason why the Commissioner-General has made the assessment;
(g) the date by which the tax is to be paid; and
(h) the time, place and manner of objecting to the assessment.

Section 41 of Act 915 on Tax Decisions or Dispute procedure (resolution)

Objection to a tax decision:
Section 42(5) of Act 915 provides that an objection against a tax decision shall not be entertained
unless the person has:
(a) in the case of import duties and taxes, paid all outstanding taxes including the full amount of
the tax in dispute; and
(b) in the case of other taxes, paid all outstanding taxes including thirty percent of the tax in
dispute.

Bishop Daniel Obinim v The Commissioner General & Ecobank Ghana Limited: On
Collection of tax and Objection of Tax Decision
Facts: The Applicant ("B") is a Pastor of a Ghanaian church. The first Respondent, the
Commissioner-General of the Ghana Revenue Authority ("C") served B with a notice of tax due
requiring B to settle the amount of tax due. With no response from B, C issued a second notice of
tax due to B to which B objected on the basis that, as a Pastor, his church catered for all his living
expenses without receiving any remuneration from the church. B further argued that his only
source of income was from his shops, which income he had fully paid taxes on. B did not hear
from C regarding his objection to C's tax assessment. Some months down the line, C served on the
second Respondent, Ecobank Ghana Limited ("E") a 3rd party debtor notice to retrieve the taxes
owed by B to the state from E as B held a bank account with E. B contended that since C had not
made a decision on his tax objection application, C was not allowed to request E to pay C the
amount of taxes owed by B from B's bank account. C argued that all due process had been followed
leading to the 3rd party notice served on E.
Held: The Court held that B by admitting to receiving a 'notice of tax due' from C had actually
been served with a "tax decision" in line with Section 41(2) of the Revenue Administration Act,
2016 (Act 915) ("RAA"). Since it had been established that B was aware of the tax decision, if B
wanted to object to the tax decision, then B had to do so within 30 days as prescribed under Section
42 of the RAA. As a matter of fact, B only objected to C's tax decision after a period of 6 months
had elapsed. The Court therefore held on the matter of whether C had breached the rules of natural
justice, that C had not breached any such rules since C served B with five (5) different notices and
letters over 2017 and 2018 inviting B to discuss his tax liability, to which letters and notices B did
not respond. In addition, since B did not object within the 30-day period, B could not then claim a
breach of natural justice, with the Court asserting that "equity will aid the vigilant and not the
indolent". The Court also ruled that C serving E with a 3rd party notice was not unlawful since C
had exhausted all available measures under the RAA to recover B's unpaid taxes, but to no avail,
and Section 60 of the RAA actually gives C the power to serve such a notice on E to recover B's
unpaid taxes. On the issue of whether or not this was an appropriate case for the High Court to
exercise its powers of judicial review, the Court again held, that B could not use his failure to
comply with laid down objection procedures in the RAA as a ground to seek judicial review, with
the Judge ruling that "this instant case is not a proper and appropriate case for the Court to exercise
its powers of judicial review." B's application to the Court was therefore dismissed in its entirety.
See Order 54 of CI 47 on Tax Appeals to High Court.
Unilever Ghana Ltd v The Comm General
Facts: Unilever filed a motion on notice for extension of time to file a Notice of Appeal against
Tax Assessment by the Commissioner General. U applied to the Comm under section 42(6) of Act
915 for a waiver of the requirement to pay 30% of the Tax in dispute for a consideration of its
objection. U also made contentions that the imposition of the restriction by the President delay its
submission of assessment of tax to the Comm.
Held: the applicant (unilever) was ordered to file its Notice of Appeal against Tax Assessment
placed on it as a liability by the Comm within 30 days.

Recovery of Tax from Taxpayer

We have direct and indirect recovery of taxes from the tax payer.
DIRECT RECOVERY:
Tax as a debt to the Gov’t.
Section 51 of Act 915 provides that:
(1) Tax is a debt due to the Government on the date it becomes payable.
(2) The Commissioner-General may initiate proceedings in court for the recovery of unpaid tax as
well as the cost of the suit.
Creation and extent of charge over assets:
Sections 52 to 55 of Act 915
Restraint of person
Section 56 of Act 915 provides that:
(1) Where a person fails to pay tax on the due date and the Commissioner-General has reason to
believe that the person may leave the country, the Commissioner-General may, by notice in
writing, request the Comptroller-General of Immigration to prevent the person from leaving the
country.
(2) The Comptroller-General of Immigration shall, on receiving the notice under subsection (1),
prevent the person from leaving the country for a period of seven days from the time the notice is
served on the Comptroller-General of Immigration.
(3) The Commissioner-General shall withdraw the notice if the person pays the tax or arranges to
pay the tax in a manner satisfactory to the Commissioner-General.
(4) The High Court-may, on an application by the Commissioner- General, extend the period
referred to in subsection (2).
INDIRECT RECOVERY
Third Party Debtors
Section 60 of Act 915 provides that:
(1) Where a taxpayer fails to pay tax on the due date, the Commissioner-General may serve a
notice in writing on a third party debtor.
(2) As soon as practicable after service of the notice on the third party debtor, the Commissioner
General shall serve the taxpayer with a copy of the notice.
(3)The third party debtor shall, on receiving a notice under subsection (1), pay to the
Commissioner-General by the date specified in the notice an amount not exceeding the lesser of
(a) the tax due by the taxpayer;
(b) the money owed by the third party debtor to the taxpayer; and
(c) the amount specified in the notice.
Managers of Entities
Section 58 of Act 915 provides that:
(1) Where an entity fails to pay tax on time, a person who is or has been a manager of the entity
during the relevant time is jointly and severally liable with the entity for payment of the tax.
(2) Subsection (1) applies irrespective of whether the entity ceases to exist.
(3) Subsection (1) does not apply to a manager who has exercised the degree of care, diligence,
and skill that a reasonably prudent person in the position of the manager would have exercised in
preventing the initial and continuing failure to pay tax…
Receivers
Section 59 of Act 915:
(1) A person appointed as a receiver of an asset situated in the country shall notify the
Commissioner-General in writing of the appointment
(a) within fourteen days of the appointment; or
(b) on the date the receiver takes possession of the asset, whichever occurs first.
(2) A receiver shall not distribute assets unless the receiver has accounted for the assets to the
Commissioner-General.
(3) The executor of the estate of a deceased individual or the legal representative of a person who
is incapacitated shall complete and submit returns under this Act on behalf of the deceased or
incapacitated person with respect to matters occurring prior to the appointment of the executor or
legal representative.

Sunu Assurances Ghana Limited v The Commissioner General (2021): on Indirect Recovery
of 3rd Party Debtors.
Facts: the applicant applied for an interlocutory injunction restraining the Commissioner and his
agents or anyone acting under his instructions from taking steps or actions against the applicant by
way of enforcement, distraint, Garnishee or recovery of taxes owed by 4th, 8th and other defendants
or any enforcement procedure pending the hearing and final determination of the suit.
Held: in granting the injunction, the applicant has been able to establish some legal and equitable
rights that ought to be protected by the Courts pending the determination of the suit. That if the
Commissioner goes ahead with the enforcement measures against Sunu (applicant), Sunu business
is likely to collapse with the additional problem of rendering its employees unemployed as against
the Comm who is likely to recover the taxes from the said defaulting defendants who are the
primary obligors in the transaction. Thus, interlocutory injunction granted.
Taylor & Taylor Ltd v The Commissioner-General
Facts: Appellant argued that the Commissioner-General erred in notifying the Bank of Ghana to
pay GH¢6,713,240.95 to Ghana Revenue Authority (GRA) on behalf of the Appellant as its tax
liability when the Appellant had not been served with a notice of assessment.
Held: The action the Respondent took in writing to the Governor, Bank of Ghana to demand
payment to be made on behalf of the Appellant without first serving a notice of assessment was in
effect to use an idiomatic English expression, was putting the cart before the horse. This was an
error of great magnitude on the Respondent’s part and was premature. Moreover, the demand for
withholding tax request should have been served on the Ministry of Health in the first instance and
not on the Appellant. The Appellant could not be made liable to the claim for withholding tax. The
Respondent in its letter to the Governor, Bank of Ghana and the actions taken thereon were not in
consonance with Act 592. These were acts of self-help and should be deprecated. Indeed, the court
regards the Respondent’s conduct with grim disfavour as its behavior smacked of capriciousness.
In Bishop D Obinim v Comm General: The Court also ruled that Commissioner serving
EcoBank with a 3rd party notice was not unlawful since Commissioner had exhausted all available
measures under the RAA to recover B's unpaid taxes, but to no avail, and Section 60 of the RAA
actually gives Commissioner the power to serve such a notice on E to recover B's unpaid taxes.
 Tax Reductions and Refund of Tax
Section 63(1) - In assessing, collecting and recovering tax, the Commissioner- General shall ignore
a tax reduction except where the tax reduction is sanctioned by law.
(2) Subject to article 174 of the Constitution, a Ministry, Department or Agency shall not negotiate
or enter into an agreement for the waiver or variation of tax except with the approval of the
Minister.
Reporting of tax reductions:
Section 64(1) - The Commissioner-General shall submit to the Minister a quarterly report on the
total amount of reductions of tax granted to or claimed by taxpayers.
(2) Each report of the Commissioner-General shall categorise reductions of tax by reference to
(a) reductions granted that comply with section 63, subcategorised by reference to
(i) each statutory provision by which the reduction is granted; and
(ii) any criteria or factors set out in Regulations;
(b) reductions granted that do not comply with section 63, including reasons why the reductions
were granted; and
(c) reductions claimed but not granted, including reasons why the claims were not granted.
Remission:
Section 65(1) - The Commissioner-General may remit tax that has been assessed, but only on
grounds of impossibility of collection of the tax.
(2) Where a person who is liable to pay a penalty shows good cause in writing to the
Commissioner-General, the Commissioner-General may:
(a) refrain in whole or in part from assessing the penalty;
(b) extend the time for payment of the penalty on conditions that the Commissioner-General may
determine; or
(c) remit or waive in whole or in part a penalty that has been assessed.
(3) The power in subsection (2)(c) may be exercised whether or not the penalty has been paid and
whether or not proceedings for an offence have been commenced or concluded.
(4) In this section, a "penalty" includes an asset liable to forfeiture or seized by the Commissioner-
General on grounds that the asset is liable to forfeiture.

Interest, Penalties, Offences and Proceeding

Read sections 70 to 86 of Act 915
Case

VALUE ADDED TAX (VAT)

Applicable Statute: Value Added Tax Act, Act 870.
It is a special type of consumption tax.
VAT is an indirect tax under the classifications.
There are output and input VAT
Output VAT: that is the VAT that the final consumer pays.
Input VAT: that is the VAT in a supply chain to the final consumer.
Equation: Output – Input = VAT Payable

There are rates of VAT:

• Flat-Rate: which is 4%
• Standard Rate: which is 12.5%
• GetFund: 2.5%
• NHI Levy: 2.5%
• Covid-19 Levy: 1 %
Persons liable to pay tax
Section 2(1) of Act 870 - Except as otherwise provided in this Act, the tax shall be paid
(a) in the case of a taxable supply, by the taxable person making the supply;
(b) in the case of an import of goods, by the importer; or
(c) in the case of an import of services, by the recipient of the service.
(2) In the case of a non-resident person required to register under section 16, the nonresident is
liable for the payment of the tax.

By Act 870, VAT is applicable when there is a taxable supply made by a taxable person in the
course of the taxable activity. Thus, taxable elements in the VAT are:
• Taxable Person
• Taxable Supply
• Taxable Activity
Taxable Person:
Section 4(1) of Act 870 provides that a taxable person is a person who is registered for purposes
of this Act or is required to register under section 6 to 16.
Subsection 2 provides that subject to sections 6 to 8 and 10 to 16, the effective date of registration
of a person as a taxable person is the date specified in the certificate of registration issued by the
Commissioner General under section 9.
Taxable Supply:
Section 33 of Act 870 provides that except as otherwise provided in this Act or Regulations, a
taxable supply is a supply of goods or services made by a taxable person for consideration, other
than an exempt supply, in the course of, or as part of taxable activity carried on by that taxable
person.
Taxable Activity:
Section 5(1) of Act 870 provides that for the purposes of this Act, a “taxable activity” means an
activity which is carried on by a person
(a) in the country, or
(b) partly in the country, whether or not for a pecuniary profit, that involves or is intended to
involve, in whole or in part, the supply of goods or services to another person for consideration.
Section 5(2) - Without limiting subsection (1), a taxable activity includes
(a) an activity of a local authority or unincorporated association or body that involves, in whole or
in part, the supply of goods or services to another person for consideration;
(b) the processing of data or supply of information or similar service;
(c) the supply of staff;
(d) the acceptance of a wager or stake in any form of betting or gaming, including lotteries and
gaming machines;
(e) the making of gifts or loans of goods;
(f) the leasing or letting of goods on hire;
(g) the appropriation of goods or services for personal use or consumption by the taxable person
or by any other person;
(h) the sale, transfer, assignment or licensing of patents, copyrights, trademarks, computer software
and other proprietary information; and
(i) the export of non-traditional products.
Section 5(3) - A supply is considered to be a supply for consideration where the supplier is directly
or indirectly entitled to receive payment wholly or partly in money or in kind from the person to
whom the supply is made or from any other person, and includes
(a) a supply made between related persons for no consideration;
(b) a supply of goods for use only as trade samples; or
(c) a supply referred to in section 21 to 23.
Section 5(4) - A supply is part of a taxable activity of a person if the supply is made by that person
as part of or incidental to any economic activity the person conducts.
Section 5(5) - Where an owner of goods enters into a contract with another person to process or
treat the goods of the owner, the delivery of the goods to the owner or the agent of the owner shall
be treated as a supply of goods by the person processing or treating the goods.
Clement Apaak v Ghana Revenue Authority: on the definition of 'wholesalers' and 'retailers'
under the VAT Flat Rate Scheme (VFRS), the applicability of the VFRS to importers, and
input VAT deduction rights of persons previously under the VAT Standard Rate scheme.
Facts: The Ghana Revenue Authority ("G") after the introduction of the VAT Flat Rate Scheme
(VFRS) in 2017, issued a Practice Note to provide additional clarity on the VFRS and the scope
of the scheme. Hon. Clement Apaak ("C"), a Member of Parliament disagreed with the
interpretation the Practice Note sought to give. In C's view, the VFRS which mandated wholesalers
and retailers to charge a VAT rate of 3% would be unfairly applied to importers who doubled as
wholesalers or retailers in the supply chain. Clement held this view because such an importer
would have had to pay import VAT at the standard rate (17.5% at the time of the ruling), in addition
to charging the 3% VFRS when they sold those imported goods in their capacity as a wholesaler
or retailer. Also, since persons under the VFRS are not allowed to deduct any VAT inputs, Clement
also contended that this was discriminatory against all importers in such a position and in clear
contravention of Article 17 of the 1992 Constitution of Ghana.
Issues: whether or not persons who were under the VAT Standard Rate scheme before becoming
VFRS taxable persons after the introduction of the VFRS had accrued rights to deduct all input
VAT credits accumulated before the introduction of the VFRS. Whether or not importers who sold
their imported goods directly to retailers or to consumers fell within the meaning of "wholesaler"
and "retailer" under the VAT Act.
Held: The Court held in favour of Ghana Rev Authority that “a person is not taxed unless the
words of the taxing statute clearly impose the tax on that person.” As such, since the wording of
the VAT Amendment Act that introduced the VFRS clearly stated that the VFRS applied to
wholesalers and retailers of goods, the law had to be strictly interpreted as such. All
importers who then sold their goods in the supply chain as wholesalers or retailers fell under
the VFRS, with importers who used the imported goods for their personal use not being
under the VFRS since they would not have acted as a wholesaler or retailer.
On the issue of discrimination under Article 17 of the Constitution, the Court held in favour of
GRA that "all other provisions relating to the supply of goods would apply appropriately to the
VFRS except the right to deduct input tax", and as such, there was no case of discrimination by
GRA's Practice Note since this is exactly what the law intended.
On the issue of accrued input VAT deduction rights prior to the introduction of the VFRS, it was
held in favour of plaintiff that all such importers had indeed accrued input VAT deduction rights
since the VAT Amendment Act on the VFRS could not be applied retrospectively. This accrued
right to deduct all such pre-VFRS input VAT however only applied to importers who had properly
cleared their goods and paid all relevant import VAT amounts. GRA was therefore ordered to
allow all such pre-VFRS input VAT claims to be deducted or refunded to taxpayers as the case
may be.

THE TAX REGIME AND INVESTMENT

- GIPC
- Ghana Free Zones
- Stamp Duty
GHANA INVESTMENT PROMOTION CENTER
Statute: GIPC Act, Act 865.
AN ACT to provide for the Ghana Investment Promotion Centre as the agency of Government
responsible for the encouragement and promotion of investments in Ghana, to 'provide for the
creation of an attractive incentive framework and a transparent, predictable and facilitating
environment for investments in Ghana and for related matters.
Section 3 of Act 865 - The object of the Centre is to:
(a) create an enhanced, transparent and responsive environment for investment and the
development of the Ghanaian economy through investment; and
(b) encourage, promote and facilitate investment in the country.

Section 25 of Act 865 - An enterprise which is wholly owned by a Ghanaian:

(a) may after being incorporated or registered be registered with the Centre; and
(b) after being registered with the Centre shall be entitled to the benefits and incentives set out in
this Act.
Activities Reserved for Ghanaians and Ghanaian Owned Enterprises:
Section 27(1) of Act 865 provides that a person who is not a citizen or an enterprise which is not
wholly owned by citizen shall not invest or participate in
(a) the sale of goods or provision of services in a market, petty trading or hawking or selling of
goods in a stall at any place;
(b) the operation of taxi or car hire service in an enterprise that has a fleet of less than twenty-five
vehicles;
(c) the operation of a beauty salon or a barber shop;
(d) the printing of recharge scratch cards for the use of subscribers of telecommunication services;
(e) the production of exercise books and other basic stationery;
(f) the retail of finished pharmaceutical products;
(g) the production, supply and retail of sachet water; and
(h) all aspects of pool betting business and lotteries, except football pool.
(2) The Minister in consultation with the Board may by legislative instrument amend the list of
enterprises reserved for citizens and enterprises wholly owned by citizens.

Enterprises Eligible for Foreign Participation and Minimum Foreign Capital Requirement
Section 28(1) of Act 865 provides that a person who is not a citizen may participate in an enterprise
other than an enterprise specified in section 27 if that person:
a. A joint enterprise with a partner who is a citizen, invests a foreign capital of not less than
$200,000 in cash or capital goods relevant to the investment or a combination of both by
way of equity participation and the partner who is a citizen does not have less than ten
percent equity participation in the joint enterprise.

b. Enterprise wholly owned by the Foreigner, invests a foreign capital of not less than
$500,000 in cash or capital goods relevant to the investment or a combination of both by
way of equity capital in the enterprise.

c. Subsection (2) provides that a person who is not a citizen may engage in a trading enterprise
if that person invests in the enterprise, not less than $1,000,000 in cash or goods and
services relevant to the investments.
Section 28(5) of Act 865 provides that the minimum foreign capital requirement of this section
shall not apply to the foreign spouse of a citizen of Ghana to the extent that:
(a) the foreign spouse is or has been married to a citizen of Ghana for a minimum period of five
years continuously or holds an indefinite resident permit prior to registration of an enterprise;
(b) the marriage has been duly verified as having been validly conducted; and
(c) the foreign spouse is ordinarily resident in Ghana.
Section 28(6) - A citizen of Ghana who losses the citizenship by reason of the assumption of the
citizenship of another country shall not be required to comply with the minimum capital
requirement of this section.
Benefits and Incentives
1. Enterprises Entitlement of Benefits:
Section 26(1) of Act 865 provides that An enterprise registered by the Centre is entitled to the
benefits and incentives that are applicable to an enterprise of a similar nature under the Internal
Revenue Act, 2000 (Act 592), Value Added Tax Act, 1998, (Act 546) and under, Chapters
82,84,85 and 98 of the Customs Harmonised Commodity and Tariff Code Schedule to the
Customs, Excise and Preventive Service (Management) Act, 1993 (P.N.D.CL. 330) and any other
relevant law.
2. Exemption of Non-Zero Rated Items:
Section 26(2) of Act 865 - An enterprise whose plant, machinery, equipment or parts of the plant,
machinery or equipment are not zero-rated under the Customs Harmonised Commodity and Tariff
Code Schedule to the Customs, Excise and Preventive Service Management Act, 1993 (PNDCL
330) may submit an application for exemption from import duties and related charges on the plant,
machinery or equipment or the parts of the plant, machinery or equipment to the Centre for onward
submission to the Minister responsible for Finance.
3. Incentives for special Investment:
Section 26(3) of Act 865 provides that the Centre shall before submitting a request for exemption
to the Minister responsible for Finance determine whether the request will facilitate changes in
technology and promote the specialised use of machinery, equipment or other items necessary for
the establishment and operation of the enterprise.
4. Priority Areas:
Section 26(4) - For the purpose of promoting identified strategic or major investments, the Board
may in consultation with appropriate government agencies and with the approval of the President
(a) specify priority areas of investment and their applicable benefits and incentives; and
(b) negotiate specific incentive packages for strategic investments in addition to the incentives
available to any enterprise under the tax, customs and other laws referred to in subsection (1).
Example of priority areas may include Automotive Industries, One District One Factory Initiative,
Oil Companies.

Section 26(5) of Act 865 provides that the Board shall publish
(a) in the Gazette and on its website the criteria for determining what constitutes strategic
investments and shall designate an investment that satisfies the criteria, as strategic investment;
and
(b) the details of special incentives awarded through negotiation under this section.
Other Benefits of GIPC on Tax:
5. By registering with GIPC, there is some protection against discrimination. Section 30 of
Act 865 provides that a foreign investor, employer or worker, shall enjoy the same rights
and be subject to the same duties and obligations applicable to citizens.

6. By registering with GIPC, there is protection against expropriation or nationalization of

foreigners’ assets. Section 31 of Act 865 provides that an enterprise shall not be
nationalised or expropriated by Government.

7. Investment Guarantee and Transfer of Capital, Dividends; section 32 of Act 865 provides
that, an enterprise shall, through an authorised dealer bank be guaranteed unconditional
transferability in freely convertible currency of dividends, foreign loans, technology and
others.

GHANA FREE ZONES

Law: The Free Zones Act 1995, Act 504.
AN ACT to enable the establishment of free zones in Ghana for the promotion of economic
development; to provide for the regulation of activities in free zones and for related purposes.
Establishment of Free Zones
Section 7 of Act 504 provides that Subject to the Constitution and any other enactment in force
relating to the acquisition of property, the President may on the recommendation of the Board by
notice published in the Commercial and Industrial Bulletin, declare:
a. any area of land or building as a free zone;
b. any airport, river port, seaport, or lake port as a free port.
(2) A declaration under subsection (1) of this section shall specify the area and the scope of
activities in the free zone concerned.
Developers and Enterprises of Free Zones
Section 8(1) of Act 504 provides that No person shall-
a) develop;
b) manage; or
c) develop and manage
A free zone unless it is a body corporate registered under the Companies Act 2019 (Act 992) or a
partnership registered under the Private Partnership Act 1962 (Act 152).
(2) The body corporate or partnership shall be licensed to develop, manage or develop and manage
free zone under this Act.
See section 9 of Act 504.
Section 11 of Act 504 provides that subject to the provisions of this Act any person may apply for
a license to establish an enterprise in a free zone.
Imports and Exports:
Section 22 of Act 504 provides that the imports of a free zone developer, sub-contractor or
enterprise into a free zone or single-factory zone shall be exempt from direct and indirect taxes
and duties.
Section 23 of Act 504 provides that the Minister may by legislative instrument authorize the sale
of up to 30 percent of the annual production of goods and services of a free zone and single factory
zone enterprise to the national customs territory.
Section 24 of Act 504 provides that Sales of goods and services by a domestic enterprise from the
national customs territory to enterprises in the free zone and single-factory zone shall be considered
as exports.
Responsibility of the Customs Division of GRA
Section 26(1) of Act 504 provides that the customs, Excise and Preventive Service shall be
responsible for the control of zero-rated goods
a. within a free zone;
b. in transit between two free zones; and
c. in transit between a free zone and a point of entry into or exit out of Ghana.
(2) The Minister after consultation with the Minister responsible for Customs and Exercise and the
Commissioner of Customs, Excise and Preventive Service may be legislative instrument make
regulations:
a) adopting or modifying for the purposes of this Act any of the regulations relating to
customs operations;
b) governing the movement of persons, vehicles or good into and out of a free zone, from and
out to other parts of the customs territory;
c) covering the keeping, storage and handling of goods in free zones;
d) covering the keeping and preserving of accounts and records in a specified form in respect
of goods in free zones; and
e) relating to the provision of security by bond or otherwise on goods in transit between free
zones and points of entry and exit from and to other countries.
Section 27 - Where goods stored in a free zone are found to be missing without an acceptable
explanation, the Commissioner may request the licensee to pay the duty on the goods at the rate in
force at the time in addition to any penalty which may be imposed by the Commissioner.
Incentives and Benefits
1. Established Enterprises and Developer Exemption of Taxes: Section 28 of Act 504
provides that free zone developers and enterprises granted licenses under this Act shall be
exempted from the payment of income tax on profits for the first ten years from the date
of commencement of operation. Subsection (2) the income tax rate after ten years shall not
exceed a maximum of 8 percent.

2. Exemption of Dividends of Shareholders: section 28(3) of Act 504 provides that a

shareholder shall be exempted from the payment of withholding taxes on dividends arising
out of free zone investments.

3. Shareholders Percentage in Free Zones: section 29 of Act 504 provides that a foreign
investor may take and hold a maximum of 100 percent of the shares in any free zone
enterprise. (2) A domestic investor may take and hold a maximum of 100 per cent of the
shares in any free zone enterprise. (3) Foreign and domestic investors shall have equal
status within the export free zones.

4. Protection against Expropriation or Nationalization of Foreigners’ Assets: section 31

of Act 504 provides that no enterprise in a free zone shall be nationalized or expropriated
by Government and no person who owns, whether wholly or in part, the capital of an
enterprise shall be compelled by law to cede his interest in the capital to any other person.

5. Investment Guarantee and Transfer of Capital, Dividends: section 30 of Act 504

provides that any enterprise in free zone shall be guaranteed unconditional transfer through
any authorized dealer bank in free convertible currency of dividends, loans, technology
transfer and others.

STAMP DUTY
Section 165 of Act 1036 provides that - An instrument is not effective unless it is stamped by
government authority or a court registrar.
Assessment of duty
Section 3 of Act 689 - The Commissioner shall assess the duties payable on an instrument required
to be stamped under this Act.
Instruments to be stamped as assessed
Section 11 of Act 689 of provides that an instrument on which a duty has been assessed by the
Commissioner shall not, if it is unstamped or insufficiently stamped, be stamped otherwise than in
accordance with the assessment.
Instruments and title registered in the land or title registry:
Section 14 of Stamp Duty Act 2005, Act 689, provides that an instrument or title shall not be
registered or entered in the registry of instruments that affect land or in the land title register unless
(a) the instrument or document containing particulars of title is stamped.
Section 13 of Act 689 provides that an instrument relating to the creation or transfer of an estate
or interest in land, submitted to the Commissioner for assessment of the chargeable stamp duty,
shall be accompanied with a statement in the form set out in the Schedule 2.
The law requires an impressed stamp and not adhesive stamp
An impressed duty stamp is a form of revenue stamp created by impressing (embossing) a stamp
onto a document using a metal die to show that the required duty (tax) had been paid.
Section 4(2) of Act 689 provides that “except otherwise provided expressly by this Act or any
other enactment, stamp duties shall be denoted by impressed stamps only”.
Section 4(5) of Act 689 (5) provides that each stamp impressed on an instrument, other than an
instrument stored electronically or in cellulose material shall contain figures denoting the actual
date on which that stamp was impressed
Antie&Ajuwah v Ogbo
Conveyance other than a Sale:
Section 19(1) of Act 689 provides that an instrument and a decree or order of a court by which
property is transferred to or vested in a person, other than through a sale shall be charged with duty
as a conveyance on sale or transfer on sale of that property for a consideration equal to the value
of that property.
Stamping on Gifts:
Section 20(1) of Act 689 provides that a conveyance or transfer operating as a voluntary
disposition inter vivos shall be chargeable with stamp duty as if it were a conveyance or transfer
of sale, with the substitution in each of the value of the property conveyed or transferred, for the
amount or value of the consideration for the value.
Stamping on Agreement for a Lease:
Section 22(1) of Act 689 provides that an agreement for a lease or with respect to the letting of
land or a tenement, is to be charged with the same duty as if it were an actual lease made for the
term and consideration mentioned in the agreement.
Stamping on Mortgages:
Section 25 of Act 689 provides that a writing evidencing a mortgage, bond, debenture, covenant,
guarantee or lien shall be treated as an instrument which shall be stamped in accordance with this
Act.
Section 26 of Act 689 provides that a security for the payment or repayment of money to be lent,
advanced, paid or which may become due on an account current, either with or without money
previously due is to be charged, where the total amount secured or to be ultimately recoverable is
limited, with the same duty as a security for the amount so limited.
Admissibility of insufficiently stamped or unstamped instrument:
Section 32(1) of Act 689 provides that where an instrument chargeable with a duty is produced as
evidence (a) in a court in a civil matter; or (b) before an arbitration or referee, the judge, arbitrator
or referee, shall take notice of an omission or insufficiency of the stamp on the instrument.
Section 32(2) of Act 689 provides that if the instrument is one which may legally be stamped after
its execution, it may, on payment of the amount of the unpaid duty to the registrar of the Court or
to the arbitrator or referee, and the penalty payable on stamping that instrument, be received in
evidence subject to just exceptions on other grounds.
AMONOO AND OTHERS v. DEE (1975) GLR: on failure to pay stamp duty on a
conveyance of land
FACTS: In 1890, a grand-uncle of the plaintiffs purchased a piece of land from one Osilbo and
the transaction was evidenced by a document which set out the boundaries of the land. One phrase
describing the boundaries of the land sold was "Abodom road right man hand land." The grand-
uncle of the plaintiffs entered into possession after the sale and cultivated palm trees, foodstuffs
and cocoa on the land. A portion of the land was sold to the African Universal Church of Bobikuma
for use as a cemetery. After the death of their grand-uncle, his successors and the family continued
in possession until about three years ago, when the defendant, the owner of an adjoining plot of
land, started encroaching on their land and plucking their cocoa. After several unsuccessful
attempts to get the defendant off their land, the plaintiffs issued a writ in the circuit court for a
declaration of title.
HELD: that there was nothing in the Stamp Act, 1965 (Act 311), which precluded the reception
in evidence of an unstamped document which could properly be stamped upon the proper payment
of fees and penalty, and both the law and ordinary justice demanded this to be so in the
circumstances of this case. If the instrument is one which may legally be stamped after its
execution, it may, on payment to the registrar of the court or to the arbitrator or referee, of the
amount of the unpaid duty, and the penalty payable on stamping such instrument, be received in
evidence, saving all just exceptions on other grounds: Provided that any instrument which is
sufficiently stamped under the provisions of this Act shall be receivable in evidence although such
instrument may be unstamped or insufficiently stamped according to the laws in force in the place
where such instrument was executed.
Lizori Limited v Evelyn Boye & School of Domestic Science & Catering (2013) SCGLR: on
Whether Court of Appeal violates the clear and unambiguous provisions of the Court’s Act
1993 (Act 459) on rulings regarding stamping.
Facts: the Plaintiff entered into a contract whereby the Plaintiff was to construct a two storey
building plus an extra floor at Kotobaabi for use by the Defendants as a domestic science and
catering school block, The Plaintiff’s case was that the total cost of the project was estimated at
over one billion old cedis. The plaintiff was to pre-finance the project and submit bills to the
Defendants for payments as and when necessary. Plaintiff further averred that they completed two
floors and started work on the extra floor. At this stage the Defendants unilaterally abrogated the
agreement and re-awarded the job to another person. The Plaintiff pleaded further that it submitted
bills for work so far done but the Defendants failed or refused to pay despite repeated demands.
That was why it commenced this action at the High Court, Accra, The Defendants averred that the
agreement was between the Plaintiff and the second defendant and was made around August 2002.
That the second defendant supplied quantities of materials notably iron rods and blocks to the
Plaintiff for the construction. However, the Plaintiff did a shoddy job. According to the Defendants
it was the Plaintiff who abandoned the work after December 2003. They went on to describe what
works the Plaintiff did at the site which was not substantial compared to what it was contracted to
do. The defendants averred that the second defendant paid the Plaintiff for work done. They
therefore rejected the Plaintiff’s at the end, the trial High court entered judgment for the Plaintiff
and made certain awards including special and general damages and interest in its favour. The
Defendants appealed to the Court of Appeal against the High Court’s judgment the Court of Appeal
overturned part of the High Court’s judgment, by admitting some receipts and some deductions
which the Court of Appeal said the High Court had wrongfully discountenanced. Dissatisfied with
the Court of Appeal’s judgment, the Plaintiff has appealed to this court.
Held: The Court of Appeal rejected the trial court’s decision on this issue and reversed it, saying
stamping was a matter of revenue so it was a miscarriage of justice that the High Court did not
have regard to the receipts, which the Court held could be stamped even after judgment. The
position of the law as stated in section 109 of the Courts Act, 1993, (Act 459) is that a court’s
decision shall not be reversed only on account of the fact that it gave a wrong decision as to stamp
duty. In other words even if the trial court was wrong in rejecting the receipts on account of non-
stamping, the Court of Appeal should not have rested its decision on that alone; it should have
proceeded to consider other evidence on record on what weight to attach to those documents.
This is what was said of an unstamped document in the Lizori Ltd case: “The provisions in section
32 of Act 6989 are clear. Either the document has been stamped and appropriate duty paid in
accordance with the law in force at the time it was executed or it should not be admitted in
evidence. There is no discretion to admit it in the first place and ask any party to pay the duty and
penalty after judgment.”
Woodhouse Ltd v Airtel Ghana Ltd: “It is clear from all this that Exhihibit A in this case, being
unstamped ought not to have been admitted into evidence by the trial court even if no objection
was raised by the defendant. It is hereby excluded.”
General Emmanuel Erskine v Victoria Okpoti: It is the failure on the part of the 2nd Defendant
to procure and produce any documentary evidence on the payment of the relevant stamp duty that
is of concern here. Granted that, the Lands Commission staff were negligent in not fixing the
impressive stamp on Exhibit 3, the 2nd defendant should have provided evidence to clear the non-
compliance. What must be clearly noted is that, the various stages in the registration process of
land documents have been well structured such as to give information to the public about prior
compliance with the process. Having failed, refused and complicit as the facts have shown in
complying with the duly established procedural steps in the registration of the document in Exhibit
3, the 2nd Defendant must be deemed for all purposes not to have met the litmus test in the
registration process.