Introduction
Tax Audits often lead to disagreements between the taxpayer and the tax authority. Such disagreements are usually to be settled in accordance with law (i.e., the stipulations of the Revenue Administration Act).
This Article provides various mechanisms for settling tax disputes between the tax authorities and the taxpayer.
Tax Dispute Resolution Mechanisms
The following tax dispute resolution mechanisms are available to a taxpayer who is dissatisfied with the decisions reached by the GRA:
Negotiation: Usually before/after the final audit report is issued to you, you can negotiate for a remission, full or partial waiver of penalties, and a portion of the tax liability. You have to prove inadvertence here and give the Commissioner good reasons why he/she should grant a remission. This option is available under the Revenue Administration Act. It was also available under the just-ended dispensation for Interest and Penalty Waiver.
Objections: You can object to the assessment of the GRA. A taxpayer who objects to an assessment of the GRA is required to pay 30% of the amount in dispute before the taxpayer’s case will be heard. The Supreme Court has recently lent support to this provision in the tax law despite calls made to declare it as unconstitutional and consequently, null and void. The objection must be lodged with the Commissioner-General within 30 days of being served the assessment.
Appeal: Where the Commissioner-General objects to your objection, you may then proceed to a court to hear your case. The recent invention in the tax dispute resolution process has led to the establishment of the Independent Tax Appeals Board (ITAB). So, a taxpayer who is not satisfied with the decision of the Commissioner-General can then bring an appeal before the ITAB, and when still not satisfied, proceed to the court.
Conclusion
Most tax disputes are usually settled out of court for a number of reasons. First, certain clients want to protect their business image and reputation. Secondly, the tax audit process is very time-consuming, so businesses may not have the luxury of time for rocking back and forth with the tax authorities. Thirdly, the administrative costs of resolving disputes through the court system are very high. As much as possible, taxpayers should endeavor to reach agreements with the tax authorities on the exact tax liability, when, and how to settle it. A way to do this is to ask GRA to give you an installment plan, especially when your business is faced with cash flow challenges.
Tax Authorities must also endeavor to apply the law rightly to the evidence and business information deposed by the taxpayer, consider the context of the business and transaction engaged in by the taxpayer, as well as other unique factors that impact the taxpayer’s business before arriving at their conclusions. Tax Audits should not be used as a punitive tool but an educational tool to deepen taxpayers’ understanding of tax laws and sound business practices.
About the Author:
This Article was written by Peter Kelly Agbeehia. Peter is a Chartered Tax Practitioner in Ghana and Transfer Pricing Consultant for an International Transfer Pricing and Tax Structuring firm with Offices in the UK, Ireland, South Africa, and Mauritius. His areas of specialty include Corporate and Commercial Law, Client Representation and Advocacy, Tax Advisory, Tax Compliance Management, Tax Audit Support and Controversy Management; Strategic Tax Planning; Transactions Structuring; Transfer Pricing and International Taxation.