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GRA⋅Domestic Tax⋅Refunds

Tax Refund

Tax Refund is reimbursement to taxpayers of any excess amount paid in taxes to the government. Tax Refund is due when your prepaid taxes and tax credits are more than the tax charged for the year. The Ghana Revenue Authority (GRA) can refund the overpayment in cash or give you a tax credit. You can use a tax credit to reduce future taxes.

Applying for Tax Refunds

A taxpayer may within 3 years of the relevant date, apply to the Commissioner – General for a refund of tax paid in excess of the tax liability of that taxpayer. The process for application is as follows:

  1. The Commissioner – General prescribes the form of the application. 
  2. The application must be in writing and include an explanation on how the excess is calculated and attach relevant evidence

 

Note: ‘Relevant date’ above means the later date of

  1. The date of the event that caused payment of excess tax
  2. The date on which the tax return is filed by the taxpayer on that payment
  3. The date of payment of excess tax.

See section 66 of the Revenue Administration Act 2016 (Act 915)

Decision on Application for Tax Refunds

The Commissioner – General shall within 60 days of receipt of an application for a refund, consider it and make an appropriate decision. The decisions made could be:

  1. A rejection of the application where the Commissioner General has the opinion that the taxpayer did not pay excess tax. 
  2. A refund made to the taxpayer if satisfied that excess tax was paid. 
  3. Further information may be requested to assist in making a final decision, If the Commissioner – General is not satisfied that excess tax was paid. 

A written notice of the decision made will be served to the applicant within 30 days. 

In the case of option (3) above, the Commissioner – General shall reconsider the application and make a decision by serving notice on the applicant within 60 days of receiving the original application.

See section 66 of the Revenue Administration Act 2016 (Act 915)

Payment of Tax Refunds

  1. Where the Commissioner – general is satisfied that a person is entitled to a tax refund, either after application by the taxpayer or by order of a court or tribunal, the Commissioner – General shall:
    • Apply the excess as a reduction of any outstanding tax liability; and
    • Refund the remainder to the person within 90 days of making the decision.
  2. Where the Commissioner – General accepts to refund part of the excess tax applied for by a person, the Commissioner – General shall refund the amount accepted, irrespective of whether the person files an objection against the decision of the Commissioner – General. 
  3. Where, the Commissioner – General fails to refund the excess tax within 90 days as specified, the Commissioner- General is liable to pay interest on the amount. 
  4. The interest is calculated as 50% of the statutory rate and is for the period 
    Beginning from the earlier of either
    • The date the refund decision is made; or
    • The day the person files an objection against the tax decision that gave rise to payment of the excess tax. 

    And ending on the day the refund is made.  

  5. Interest paid by a person under a tax law with respect to tax not paid on time shall, where the tax is found to have been payable, be refunded to the person with any interest. 
  6. Where the Commissioner – General refunds tax in error, the Commissioner – General may recover the refund as a tax liability.

See section 66 of the Revenue Administration Act 2016 (Act 915)

For more information and detailed explanations on the Tax Refund process, see the Practice Note (RAA/2020/05) on payment of tax refund under the Revenue Administration Act.

VAT Refunds

For VAT Refunds in Ghana, the VAT Act, 2013 (Act 870) outlines the process for applying for and receiving VAT Refunds.

Refund or Credit for excess Tax Paid

  1. Where the amount of input tax which is deductible exceeds the amount of output tax due for that tax period. 
    1. The excess amount shall be credited by the Commissioner – General to the taxable person, and
    2. In the case of the portion of the excess attributable to exports, the Commissioner – General may refund the excess credit to the taxable person where that person’s exports exceed 25% of the total supplies within the tax period and the total export proceeds have been repatriated by the importers’ banks to the taxable person’s authorized dealer banks in the country. 
  2. A taxable person may apply for a refund under (1)(a) where the credit for the excess amount remains outstanding for a continuous period of 3 months or more, except that where the Commissioner – General orders an audit of the claim for refund, the application shall be treated as received on the date that the audit is concluded.
  3. Where a person has overpaid tax in the circumstances specified under subsection (3) of section 50 of VAT Act, 2013 (Act 870), the person may apply in writing to the Commissioner-General for a refund of the excess amount of tax, accompanied by documentary proof of payment of the excess amounts.
  4. Where the Commissioner-General is satisfied that a person who has made an application correctly has overpaid tax, the Commissioner- General shall
    1. First apply the amount of the excess against the liability of that person for any tax, levy, interest or penalty administered by the Commissioner-General, and
    2. Repay any amount remaining to the person within 30 days of being satisfied that the person has overpaid tax.
  5. A claim for a refund shall be made within six months after the date on which the excess arose.
  6. The Commissioner-General shall serve on a person claiming a refund, a notice in writing of the decision in respect of the claim.
  7. Where the registration of a taxable person is cancelled and the person has excess credits that were not recovered as provided in this section, the excess credits may be treated in the manner prescribed above.
  8. A taxable person applying for a refund shall submit to the Commissioner-General a completed Refund Claim Form together with the relevant tax invoices or, in the case of imported goods, the relevant customs document for tax paid, or any other documents as requested by the Commissioner – General. 
  9. The Commissioner-General may specify the manner in which documents may be submitted.
  10. Where the Commissioner-General rejects the claim for a refund, the Commissioner General may recover in accordance with the Act any tax previously refunded.
  11. Except as otherwise provided, a credit shall be carried forward to the next tax period. 
  12. A person who makes a claim for refund which that person is not entitled to is liable to a penalty of double the original amount of the refund plus interest.

For more information on the VAT Refund process, please see Sections 50 & 51 of the VAT Act, 2013 (Act 870)

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