For most taxpayers, their interaction with the tax system goes little beyond paying the tax assessed by the Ghana Revenue Authority (GRA) under the relevant tax law. Yet sometimes, the figures may suggest that a taxpayer has paid more than was actually due. That suspicion is not necessarily misplaced. There are circumstances in which a taxpayer may genuinely have overpaid tax, leaving them to wonder whether all they have is an unresolved grievance or whether there exists a basis for seeking redress.
The law would be incomplete in its aim of regulating the affairs of the people if it failed to provide a mechanism through which a person could obtain redress in such a situation. Thankfully, the Revenue Administration Act, 2016 (Act 915), together with other tax legislation, provides for tax refunds. So, if a taxpayer believes that the state has received more tax than the taxpayer was legally required to pay, how does the taxpayer go about getting it back?
The Right to Apply for a Refund
Section 66 of Act 915 permits a person to apply to the Commissioner-General for a refund of tax paid in excess of that person’s tax liability. The application must be made within three years of the relevant date.
The law defines the relevant date as the later of the date of the event giving rise to the excess tax, the date the relevant tax return was filed, or the date the tax was paid. This means that a taxpayer who believes an overpayment has occurred should not leave the matter unattended indefinitely. The statutory period matters.
The application must be made in writing, in the form prescribed by the Commissioner-General. It must explain how the excess was calculated and must be accompanied by the relevant evidence. That requirement goes to the heart of the refund process. A taxpayer’s belief that they have paid too much is only the starting point. The claim must be capable of being demonstrated from the figures and supporting records. Depending on the circumstances, the relevant evidence may include tax returns, payment records, assessments and other documents showing what was paid and what was actually due.
The GRA’s refund guidance also recognises that the process may involve verification of the alleged excess, including a tax audit where necessary.
GRA’s Consideration of the Application
Once the application is received, the Commissioner-General is required to consider it and make an appropriate decision within 60 days. The Commissioner-General may reject the application where there is no excess tax. Where satisfied that excess tax has been paid, the Commissioner-General is to make the appropriate refund decision. If the Commissioner-General is not yet satisfied and requires further information, that information may be requested from the taxpayer.
The taxpayer is to be notified of the decision in writing. Where further information has been requested, the law provides a further framework for reconsidering the application after the information is received. This makes the refund process more than an informal request to the revenue authority. It is a statutory procedure, with obligations imposed on both sides: the taxpayer must properly establish the claim, while the Commissioner-General must consider and determine it within the periods prescribed by law.
Application of an Approved Refund to Outstanding Tax Liabilities
There is another feature of the law that a taxpayer should bear in mind. Establishing an excess does not necessarily mean that the entire amount will immediately be paid into the taxpayer’s bank account.
Under section 68 of Act 915, where the Commissioner-General is satisfied that excess tax has been paid, the excess is first applied to reduce any outstanding tax liability of the taxpayer. The remainder is then refunded. The GRA’s Practice Note also indicates that an overpayment under one tax type may be applied to an outstanding liability under another tax type in accordance with the order determined by the Commissioner-General.
For instance, if a taxpayer establishes an excess payment of GH¢50,000 but has an outstanding tax liability of GH¢15,000, the outstanding liability may first be settled from the excess, leaving GH¢35,000 to be refunded.
The 90-Day Period for Payment and Interest on Delay
Once the Commissioner-General has made a decision establishing that an excess has been paid, the remaining amount is to be refunded within 90 days of the decision.
The law also recognises that a taxpayer should not be left indefinitely waiting for money which the state has accepted is due back. Where the Commissioner-General fails to make the refund within the prescribed 90 days, the Commissioner-General becomes liable to pay interest. Under section 68, the interest is calculated at 50% of the statutory rate for the period prescribed by the Act.
The distinction between the two periods is therefore important. The Commissioner-General has 60 days to consider and decide the refund application, while the approved refundable balance is to be paid within 90 days of the decision.
Judicial Recourse in Appropriate Cases
The administrative refund process will not always end in agreement between the taxpayer and the GRA. There may be disagreement about whether an excess exists, how it should be calculated, or whether the taxpayer is entitled to the amount claimed.Section 68 contemplates a refund arising not only from an application but also from an order of a court or tribunal.
In the case of Republic v Commissioner-General of the Ghana Revenue Authority; Ex Parte Ability Distribution Parks Ghana Ltd., the applicant company sought orders from the High Court compelling the Commissioner-General to refund VAT credits which it claimed had accrued between 2015 and 2019. The application was ultimately dismissed by the Court.
The case is nevertheless useful for a narrower proposition: disputes concerning the exercise of tax-administration powers can, in appropriate circumstances, come before the courts.
Where the circumstances warrant it, judicial review or another appropriate legal remedy may therefore be explored to vindicate a taxpayer’s rights.
Practical Steps for a Taxpayer Seeking a Refund
The first step is not necessarily to approach the GRA with a bare assertion that too much tax has been paid. It is to reconcile the taxpayer’s records and determine whether there is in fact an excess. Once the overpayment is established, the taxpayer should identify how it arose, calculate the amount carefully, gather the supporting evidence and make the application within the statutory three-year period.
The taxpayer should also keep a proper record of the application and any subsequent correspondence with the GRA. If further information is requested, it should be provided promptly and in a manner that allows the claim to be properly verified.
For a taxpayer who has long wondered whether an apparent overpayment is merely a grievance or something capable of being remedied, the answer is now clear: it may be a legal claim, provided the taxpayer can establish the excess and follow the procedure prescribed by law.
