GRA advised to apply withholding tax to e-commerce platforms
Lecturer at the University of Ghana (UG) School of Law, William Owusu Demitia, is advocating for the application of withholding tax to e-commerce platforms by the Ghana Revenue Authority (GRA).
The call for the application of withholding tax to e-commerce platforms operating in the country is in furtherance to the generation of revenue from e-commerce activities undertaken by these platforms.
Withholding tax is a tax which is deducted at source by a withholding agent (a person required to deduct tax) when making payment to another person and accounted for later to the GRA.
Speaking at the Graphic Business/Stanbic Bank Breakfast Meeting on Tuesday, March 22, Mr Dimitia, averred the country’s withholding tax laws should be reviewed with goal the of making e-commerce platforms withholding tax agents for the GRA.
“Our laws on withholding tax need to be looked at, because when payments are made on these platforms, the data aggregators (e-commerce platforms) are the ones that hold the monies and pay the monies to the vendors.
“Under the law, it is only a person who makes payment that has the withholding obligation if certain thresholds are satisfied.
“In other jurisdictions, withholding tax agents include anybody who has custody of the money, and in this case you could have the data aggregator (e-commerce platform) whose app is being used being a withholding agent for the appropriate taxes to be deducted at source and paid to the GRA,” he remarked.
Making further comments with regards to the revenue generation capacity of e-commerce for the government, Mr Dimitia posited that e-commerce provides government the perfect solution to its inability to identify tax payers and track their income to ascertain if they are indeed fulfilling their tax obligations.
According to him, the provision of a Tax Identification Number (TIN) of vendors on e-commerce platforms for instance, can help the GRA track income made by these vendors and charge the appropriate taxes.
“Two things that plaque our ability to generate revenue in this country are our inability to identify tax payers and track their income to find out if they are fulfilling their tax obligations.
“Now e-commerce provides us a perfect solution to address that, so for instance when you use a ride sharing app you must first register and so must the driver offering the service, and so what we see here is data being generated, and so the issue of identifying a tax payer if the person is operating on an e-commerce platform is largely addressed.
“So then it now becomes important to ensure that the revenue authorities liase with these data aggregators (e-commerce platforms) to get these information.”
“Now in identifying, tracking and generating revenue, what the GRA could do is to add another requirement that demands that vendors or persons providing a service online adds their TIN when registering to be on a platform.
“In that way whenever the vendor issues a receipt for a good or service rendered, the GRA is able to track the income the vendor is making and deduct its tax,” he noted.
Speaking further, Mr Dimitia posited that there should be aggressive targeted policies aimed at making users of digital channels comfortable, so data can be generated for tax purposes.
This year’s Graphic Business/Stanbic Bank Breakfast Meeting was themed Integration of E-Service into our Economy: Implications for Economic Growth and Quality of Life.
The Breakfast Meeting is a platform for discussing critical and relevant topics that have the potential to contribute to the economic and social development of the country.
