A senior tax expert has dismissed claims by some small and medium enterprises (SMEs) that maintaining accurate business records results in higher tax liabilities.
Speaking at an SME Business Interaction Session organised by Access Bank (Ghana) PLC in partnership with Deloitte Ghana, Gilbert Yirenkyi Addo, Associate Director for Business Tax at Deloitte, described the belief as a persistent misconception among many SME operators.
“It is a misconception by most SMEs to think that if they keep proper records, the Ghana Revenue Authority (GRA) will know their true worth and tax them accordingly. Record keeping is not only for tax purposes,” Mr Addo stressed.
He explained that doing business is effectively signing a social contract with the public and the state, which includes contributing to national development through tax compliance.
The state, he added, also recognises the operational challenges businesses face and has mechanisms to match taxes paid with allowable expenses, ensuring that firms benefit from the taxes they contribute.
Mr Addo emphasised that taxes are calculated on profit revenue minus allowable business expenses but not on gross revenue. This means proper record-keeping can help reduce tax obligations, not increase them.
“Keeping records is not necessarily for tax purposes. Concealing information is closer to criminal activity. SMEs should note that whatever you procure, there is a central point where information could be gathered. Proper records also allow you to access tax incentives,” he explained.
He cited the example of capital allowance, which offers tax relief when businesses purchase assets. Without purchase records, however, tax authorities would be forced to rely on their own data to calculate liabilities, potentially disadvantaging the business.
Mr Addo urged SMEs to embrace transparency and adopt sound record-keeping practices, noting that accurate documentation not only benefits the tax process but also supports business growth and financial planning.
The session, held under the theme “SME Financial Empowerment: An Imperative for Business Resilience,” aimed to equip SMEs with the knowledge to strengthen their financial management practices and enhance resilience in a competitive business environment.
