Government to withdraw 1% tax on interest

The Ministry of Finance says government has taken note of public concern and has submitted proposals to parliament to reverse the 1 per cent tax on interest earned by individuals as provided for by the Income Tax Act of 2015 (Act 896).

According to the ministry, proposals have also been submitted to parliament to review the increase of withholding tax on services to 15 per cent, according to a statement by the Ministry, signed by Finance Minister Seth Terkper.

This comes in the wake of public disapproval with the provisions of the new Income Tax Act passed in September 2015.

One sports journalist wrote after being served a bank notification of the 1 per cent tax on interests: “People already don’t trust the banking system. And then now we are gonna be taxed for investing the small coins we make? The government apparently has no mercy on young people who want to work towards a better life.”

A statement by the Ministry of Finance said the Act was to revise and consolidate the laws relating to income tax after 15 years of operating the Internal Revenue Act 2000 (Act 592).

“It simplifies the provisions of the legislation and makes it more user friendly, enhances efficiency and facilitates compliance. It retains provisions that are peculiar to income tax administration worldwide. (Eg. withholding tax and tax payable by instalment provisions).

It further broadens the tax base and removes the narrow and distorted tax base of the Internal Revenue Act, 2000 (Act 592); rationalizes, streamlines and restrict tax concessions; tackles erosion of the tax base and aligns domestic tax rules with current international tax rules”, the Ministry of Finance said.

By Emmanuel Odonkor