The Internal Revenue Service (IRS) says it will employ all legal means to recover from the Ministry of Youth and Sports taxes in respect of bonuses and other earnings paid to players and officials of the Black Stars from their participation in the FIFA World Cup in South Africa.
It dismissed suggestions that the service might play it soft in recovering the taxes from the ministry or even stop pursuing the ministry for the revenue simply because it involved government institution.
“We don’t favor government institutions; we don’t favor anybody. We do our work according to the law,” the Acting Head of Public Relations of the IRS, Mr. Kwasi Bobie-Ansah, told the Daily Graphic on Tuesday, July 27.
He said the ministry would also be required to pay penalty on the taxes which it was required to withhold if it failed to do so.
The Ministry of Youth and Sports had earlier indicated to Daily Graphic that it has not withheld taxes on the bonuses and other earnings of players and officials of the Black Stars, despite prior notification by the IRS to do so.
The Chief Director of the Ministry, Mr. Abdulai Yakubu had explained that since the beginning of the payments of bonuses to players, there had not been any occasion when taxes had been deducted from them and so the ministry only continues with the status quo.
He said having fully paid the bonuses and other earnings to the players, some of whom had left the country, any attempt to recover the taxes from them would be an exercise in futility.
However, Mr. Bobie-Ansah cited copious provisions of the Internal Revenue Act, 2000 (ACT 592) to buttress the point that the law did not appreciate the explanation of the Ministry.
Section (I) of the Act provides, “An employer shall withhold tax from the payment of an amount to be included in ascertaining the income of an employee from the employment as prescribed by Regulations made under section 114.”
He said the ministry, as the withholding tax institution, was therefore required to withhold taxes on the bonuses and earnings of the players and officials, adding that any excuse to the contrary was not acceptable.
Section 87 of the Act also provides, “Subject to section (2), a withholding agent shall pay to the Commissioner a tax that has been withheld or that should have been withheld under the this sub-division within 15 days after the end of the month in which the payment subject to withholding tax made by the withholding agent.”
Mr. Bobie-Ansah said by failing to comply with the afore-mentioned provision of the law, the ministry would face penalty, as specified in Section 88 (1), which provides, “A withholding agent who fails to withhold tax in accordance with this sub-division is personally liable to pay to the commissioner the amount of tax which has not been withheld, but the withholding agent is not entitled to recover this amount from the payee.”
Section 143(2) of the act, as amended, further provides, “where a person fails to pay any tax which that person is required under this act to withhold and pay to the commissioner on the due date, that person is liable (a) in a case where the failure is for a period of not more than three months, to pay a penalty equal to 20 per cent of the tax payable, in addition to the tax unpaid; (b) in a case where failure is for a period exceeding three months, to pay a penalty equal to 30 per cent of the tax payable in addition to the tax unpaid.”
Mr. Bobie-Ansah said the IRS was not in conflict with the Ministry of Youth and Sports but that the service only wanted the right thing to be done.
He said in respect of the agreement to pay Coach Milovan Rajevac $500,000 for qualifying the Black Stars to the World Cup tournament, an agreement had been reached with the coach’s employers to pay tax on that earning.
Source: Daily Graphic