Lack of Understanding of Tax System by MSMEs Affecting Compliance – Professor of Law
Legal practitioner and lecturer Clara Beeri Kasser-Tee calls for effective policies to regulate the tax system in the informal sector.
According to Clara Bee Kasser-Tee, most micro, small and medium-sized enterprises (MSMEs) are overtaxed, hence their failure to comply with tax laws.
Speaking at the launch of a research paper by the Ghana Center for Democratic Development (CDD), she said the majority of informal sector actors have no problem parting with money, but do not understand how the tax system works.
“I always make the joke in my tax class that Ghanaians don’t seem to have a problem paying taxes if we look at the culture. They sow seeds all the time, they give first and second harvests so that they have no problem parting with the money. So if they can understand the tax system and know that they are fair, I think they will be good corporate citizens.
“We need to tailor policies to company size and gender balance. Women-owned businesses have a greater need for information and training as well as education on the dangers of handing over paperwork to someone else, ”she said.
The research paper, “Access to Justice and Public Services: Experiences of MSMEs in Ghana”, was written by Mavis Zupork Dome and Daniel Armah-Attoh.
According to Mavis, MSMEs in Ghana are not growing, hence the need to take the results seriously.
“The findings are very revealing and timely given the recent budget presentation. It is time for policy makers and local assemblies to take a look at it. The worrying part of the research is that MSMEs are not growing. “
“Some of the challenges we encountered were access to capital, high interest on loans, financial management and access to justice services,” she said.
The survey found that the majority of MSME owners are aware of the obligations and requirements to obtain a certificate of business registration from the Registrar General and obtain a business license from the local government authority.
However, around 87% of companies are not in compliance, while 62% of MSMEs are unwilling to pay taxes.
According to the results, business owners are dissatisfied with public services and the inaccessibility of information on how taxes are used, hence the refusal to be consistent in payment.
The research paper also documented MSMEs’ experiences with the judiciary.
It showed that less than a fifth of businesses use the formal court system.
About 87% expressed a lack of confidence in the system.
The study suggests a gap between the state’s capacity to provide a platform, tools and services to MSMEs. It therefore stresses the need to create a mutually beneficial system by making services easily accessible to MSMEs.
The research further recommended the need to computerize and improve knowledge of the justice system. These, when taken into consideration, felt that they would enhance business confidence in the system.