GRA to begin collection of property rate tax
The Ghana Revenue Authority (GRA) has indicated that it could soon set out to collect property rate taxes from property owners in the country.
This is because it is in the process of finalising a deal with the Municipal and District Assemblies to collect the taxes on the Authority’s behalf.
The law empowers local assemblies to collect the property rate taxes but that appears to be a challenge as the assemblies are currently struggling to do so because of capacity issues.
The Commissioner General of the GRA, Rev. Dr. Ammishaddai Owusu-Amoah, has noted that although the collection of the property rate is for the Municipalities, the GRA is coming to assist in the collection process.
“There are two different taxes as far as property rate is concerned, you having the property and paying property tax. You renting the property and pay rental tax which is like an income tax coming from the property that you’re renting. Now in the budget also, if you recall the government did say that he wants the GRA to play more active role in helping the municipalities to collect the property tax as well.
“And so we have already engaged them and we are coming out with the strategies to help the MMDAs to be able to collect the property tax. There would be some sort of ratio or sharing to ensure that GRA and for that matter the central government is compensated in terms of helping local authorities collect the property rate taxes,” he said.
The collection of the property rate tax is expected to help government increase its revenue in view of the revenue shortfalls the country is faced with.
Meanwhile, the Ghana Revenue Authority [GRA] has urged landlords to assist the authority in discharging its responsibility of mobilizing rent tax by paying tax on their rent income.
The GRA has noted that it is the obligation of landlords to pay some amount of their rent income as tax to the authority.
The authority made this known in a press statement it issued, adding that, the collection of the rent tax is pursuant to the Regulation 16(1) and (2) of LI 1675 as amended, which indicates that an individual who receives rent from any residential premises will have to pay 8% tax calculated on the rent income separately to the Commissioner General with respect to residential premises and 15% with respect to non- residential premises on the gross rent income in a year of assessment.
The authority is requesting the cooperation of landlords by furnishing the authority with truthful and accurate information by completing a form and submitting the form to the nearest GRA Domestic Tax Revenue Division.
“We request that you cooperate with the authority by furnishing us with the truthful and accurate information by completing the attached forms and submitting them to the nearest GRA Domestic Tax Revenue Division former IRS and VAT service”, the statement said.
Meanwhile, the Ghana Revenue Authority [GRA] has justified its decision to tax earnings of landlords from the rental of their properties.
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The justification for the tax by the GRA, follows concerns that the authority is moving into an area that is the preserve of the District, Municipal and Metropolitan Assemblies [MMDAs].
But the GRA has however, maintained that it is within its mandate to do so.
The Commissioner General of the GRA, Reverend Ammishaddai Owusu-Amoah, has noted that more education will be done to landlords in order to have them comply with the rent tax.
“This year we plan on doing more education, people have not understood the rent tax. The rent tax is not a new tax and I want to emphasise that, the rent tax has been a statute for a long time.
“Just that its compliance level has been low and therefore we have come out with strategies to ensure compliance and we are saying again that the digitization allows us to now see it on the map digitally, all the properties that are being rented.
“And so we are now forcing compliance and that is why we are sending people around, we are only trying to make sure people understand it and pay,” he said.
The Ghana Revenue Authority last year revealed that it will begin implementing rent tax beginning early this year – 2022.
The Commissioner opined that businesses liable to pay rent tax include businesses or individuals who receive income from letting or leasing a property and an agency that qualifies to withhold tax.
Speaking at the Ghana Financial Intermediation Awards on Friday, June 11, 2021, Rev. Owusu-Amoah hinted that the Rent Tax App with data of every Ghanaian will allow the authority to know if a property is owner-occupied or rented.
“For the good of everyone, we have introduced the Rent Tax App which has everyone’s data on it. If your name is searched the app will take us directly to your location and then when we get there we will be able to identify whether the property is owner-occupied or rented. This will make it impossible for anyone to hide from paying taxes. If you have a property you are renting, start paying the rent tax. We should all be compliant with this new ideology. Currently, we have started implementing the app in the Accra, Kumasi, Tema areas,” he said.
“Failure to pay your tax on rent income by the due date will attract an interest of 125% of the statutory rate compounded monthly. Remember to make available copies of all receipts of payment of rent tax for inspection by officers of Ghana Revenue Authority (GRA),” the GRA Commissioner-General added.
Rent income accrues to someone as a result of letting or leasing a property to another person. The tax paid on rental income is referred to as Rent Tax. Rent Tax must be paid within 30 days after the rent income is received by landlords or property owners.
There are two rent tax rates: 8% for residential premises and 15% for non-residential premises. Payment of the rent tax can be made at the nearest Domestic Tax Revenue Division Office and at all banks.
