Parliament has amended the Income Tax (Amendment) Act 2015 to exempt withdrawals from third-tier provident funds and personal pension schemes from tax.
This is to cushion individuals who have lost their jobs or capital due to the Coronavirus pandemic.
This amendment in fiscal terms will amount to 639 million Ghana cedis if all funds are withdrawn under the given circumstances.
The house also approved a request to waive taxes on personal emoluments of health workers for April, May, and June and additional allowance for frontline health personnel for March, April, May, and June 2020.
A Deputy Minister of Finance, Abena Osei Asare briefed the house on government’s rationale for these policy decisions.
“Mr. Speaker, the COVID-19 pandemic has resulted in some economic challenges for businesses. Some sectors of the economy have suffered losses which may lead to some employees being laid off permanently and the folding up of businesses of some self-employed businesses. Such persons may require funds to sustain themselves.
“One ready source of funds will be contributions to the third tier provident funds and personal pension schemes. Mr. Speaker, withdrawals from the third-tier and personal pension schemes before retirement are however subject to tax if they are withdrawn before 10 years by contributors in the formal sector and before five years by contributors in the informal sector. Mr. Speaker, the government has decided to exempt such withdrawals from tax for employees who lose their jobs permanently or whose businesses collapse due to the COVID-19 pandemic. Exemptions will be equivalent to 15 percent to the withdrawals”.
But Ranking Member on Parliament’s Finance Committee, Cassiel Ato Forson says the government should extend a similar gesture to SSNIT contributors to attain some relief amidst the Coronavirus pandemic.
“There is something all of us must understand and find a clever way to make sure this happens. Mr. Speaker, as we speak, the government owes SSNIT some money. The government can decide to pay SSNIT and ask SSNIT to be able to take up that mandate. Government alone as a state can’t take up the responsibility of paying the wages and salaries of private-sector workers. It can’t.
“There are several ways the government can engineer and do this. One of the ways for us to encourage SSNIT to take up the burden of contributors is by paying some lump sum to contributors in times like these when businesses are struggling. It will be prudent for all of us to reconsider and debate this and encourage asset to come to before us with an amendment law to enable pensioners and contributors to withdraw some monies to support their businesses.”
The post COVID-19: Income Tax Act amended to allow tier-three pension withdrawals appeared first on Citinewsroom - Comprehensive News in Ghana, Current Affairs, Business News , Headlines, Ghana Sports, Entertainment, Politics, Articles, Opinions, Viral Content.
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