Law 477 - L2- Tax Avoidance and Tax Evasion.pdf

KWAME NKRUMAH UNIVERSITY OF
SCIENCE AND TECHNOLOGY
FACULTY OF LAW
– LECTURE TWO –
LAW 477 – LAW OF TAXATION I

LAW 477 – LAW OF
TAXATION I
TAX AVOIDANCE & TAX EVASION

LECTURE OUTLINE
INTRODUCTION &
DEFINITIONS
TAX AVOIDANCE –
FORMS
APPROACHES TO
ADDRESSING TAX
AVOIDANCE
TAX EVASION –
DEFINITION & FORMS
APPROACHES TO
TACKLING TAX
EVASION
CONCLUSION

INTRODUCTION
▪ Taxation is compulsory whether or not people are willing to pay. As
such, some persons resist taxation by devising ways to avoid or, if
possible, evade tax.
▪ This lecture discusses tax avoidance and tax evasion, the forms they
may take and approaches to tackling them.
▪ At the end of the discussion, students should be able to:
▪ know and explain the different forms of resistance to taxation;
▪ understand the effects of tax avoidance and evasion; and
▪ understand and critically evaluate the judicial and legislative
approaches to tackling tax avoidance and evasion.

TAX AVOIDANCE – DEFINTION
According to Wheatcroft, tax avoidance may be defined as ‘the art of dodging tax without actually breaking the law.’
- GSA Wheatcroft, ‘The Attitude of the Legislature and the Courts to Tax Avoidance’ (1955) 18 (3) The Modern Law
Review, 209, 212.
To Flesch, tax avoidance is ‘the lawful carrying out of a transaction which was either entered into or which took a
particular form for the purpose of minimizing taxation.’
- Flesch MC ‘Tax Avoidance: The Antidote of the Legislature’ (1968) Current Legal Problems 215
Pinson on Revenue Law defines tax avoidance as the techniques by which the lawyer and the accountant can so
arrange a client's affairs as to achieve a reduction in the amount of tax he would otherwise have to pay.
- Barry Pinson and John Ralph Gardiner, Pinson on Revenue Law (14th edn, Sweet and Maxwell 1981) 652

TAX AVOIDANCE – DEFINTION (cont.)
▪ Tax Avoidance is “…a term used to describe behaviour aimed at reducing tax liability that falls
short of tax evasion. While the expression may be used to refer to ‘acceptable’ forms of
behaviour, such as tax planning, or even abstention from consumption, it is more often used in a
pejorative sense to refer to something considered ‘unacceptable’ or ‘illegitimate’ (but not in
general ‘illegal’). In other words, tax avoidance is often within the letter of the law but against the
spirit of the law.”
- Rogers-Glabush J (ed), IBDF International Tax Glossary (7th rev edn, IBDF 2015) 34
▪ “The act of taking advantage of legally available tax-planning opportunities in order to minimize
one's tax liability.”
- Garner BA and Black HC, Black’s Law Dictionary (8th ed, West Publishing Co 2004) 4570

▪ Tax avoidance is ‘A term that is difficult to define but which is generally used to describe the arrangement of a
taxpayer's affairs that is intended to reduce his tax liability and that although the arrangement could be strictly
legal it is usually in contradiction with the intent of the law it purports to follow.’
- OECD, Glossary of Tax Terms (https://www.oecd.org/ctp/glossaryoftaxterms.htm#A)
▪ ‘Tax avoidance can be interpreted as an effort by companies to reduce the tax burden legally without violating
existing tax regulations. This tax avoidance is part of the efficiency of the tax burden, which is carried out by
maximizing the weaknesses (loopholes) of the applicable tax regulations so that no violations are committed.’
- Muhammad Agra Ramadhani and Others, ‘Tax Avoidance and Tax Aggressiveness of Energy Sector Companies Before and
after Implementation of the Voluntary Disclosure Program’ (2023) 4 (2) Jurnal Pajak dan Keuangan Negara 454, 457

STATUTORY DEFINITION
Tax avoidance ‘…includes an arrangement, the main purpose of
which is to reduce or avoid tax.’
- Section 34 (2) of the Income Tax Act, 2015 (Act 896).
Refer also to the definition of ‘arrangement’ in section 34 (4) and
‘tax avoidance arrangement’ in section 99 (4) and (5) of the
Revenue Administration Act, 2016 (Act 915)).

Based on the definition by Wheatcroft and other definitions above, it may be asserted that a tax avoidance
scheme is one which :
▪ avoids tax;
▪ is in fact entered into for the purpose of avoiding tax or adopts some artificial or unusual form for the
same purpose;
▪ is carried out lawfully; and
▪ is not a transaction which the legislature intended to encourage.
In essence, for a particular act, scheme or transaction to be considered as a tax avoidance technique, it
must have been an artificial, unusual or fictitious transaction, which does not have any commercial or
economic purposes other than for the purposes of avoiding or reducing tax liability.

FORMS OF TAX AVOIDANCE
▪ Some tax avoidance schemes or transactions include but are not limited to the
following:
▪ Change in accounting year/basis period to produce a tax benefit through
the deferment of the date of payment of taxes. However, section 18 (3) of
Act 896 and paragraph 4.2 of Practice Note Number DT/2016/007 have dealt
with this.
▪ Indirect payments made for the benefit of the taxpayer. (See section 27 of
Act 896)
▪ The transfer of the property of the taxpayer outside the jurisdiction of the
taxing statute to prevent any tax liabilities.

FORMS OF TAX AVOIDANCE (cont.)
▪ Purchase of a defunct company which has suffered great loss so that same could be used as a set
off for future profits of the company.
▪ The creation of a trust scheme or any self-cancelling scheme with the aim of avoiding tax. This may be
done through a company deciding not to distribute profits but to create a trust just to avoid tax.
▪ Transferring income from a high taxpayer to a low or nil taxpayer. If the low or nil taxpayer is entitled
to some income tax reliefs, that will be exploited as well. Income may be transferred through various
ways including settling property producing the income, or by a deed of covenant, or by a company
transaction such as appointing the tax avoider’s child to be a director with nominal duties.
NB. Tax avoidance schemes or mechanisms are not exhaustive. It depends on the skills, determination and
resourcefulness of the taxpayer and his advisers.

TAX AVOIDANCE – THE PROBLEM (cont.)
‘It is everyday practice to make arrangement with a view to avoiding tax.’
- Jifford v Gee [1970] 2 QB 130 at 150 per Lord Denning.
Tax avoidance, though undesirable, is perfectly legal and no one can be punished for an act done within
the remits of the law.
- Levene v. IRC [1928] A.C. 217 at 227.
‘No man in this country is under the smallest obligation, moral or other, so to arrange his legal relation to
his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his
stores.’
- Ayshire Pullman Motor Services and DM Richie v. IRC [1929] 14 TC 754 at 763 per Lord Clyde.

TAX AVOIDANCE – THE PROBLEM (cont.)
▪ The problem with tax avoidance is that there is a perfectly legal arrangement by
or under the authorisation of a taxpayer to avoid/reduce tax but that
arrangement contradicts the intent of the law.
▪ The issue is how to strike an acceptable balance between curbing the menace yet
avoiding arbitrariness in the tax system.
▪ Over the years, the problem of tax avoidance has been tackled from the judicial
and legislative fronts. The approaches used are briefly discussed below.

JUDICIAL APPROACHES TO TACKLING TAX AVOIDANCE
▪ In dealing with tax avoidance arrangements, some
approaches have emerged. These are used by the
courts to address tax avoidance issues. These
approaches are:
▪ Traditional Approach
▪ Modern Approach
▪ Doctrine of Form and Substance

JUDICIAL APPROACHES (cont.)
THE TRADITIONAL APPROACH
▪ This approach stemmed from the basic principle of the interpretation of tax statutes (mainly the literal
approach). It is to the effect that when a court is confronted with a tax avoidance transaction or
scheme, the court is to consider whether that transaction was within the express letter of the law. This
was also because of the notion that tax is a creature of statutes and should be construed strictly.
▪ The traditional approach involved a two-stage test that was developed by the courts;
▪ first, the court considers the text of the relevant taxing statute to ascertain its true effect;
▪ second the court considers separately the various acts of the taxpayer to determine whether they fall
within the text of the taxing statute.

‘...it is for the crown seeking to tax the subject to prove that the tax is exigible not for the subject to prove
that his case falls within the exceptions which are not expressed in the statute but arbitrarily inferred from it.’
-Hocthrasser v Mayes [1959] 3 All ER 817
‘…if the subject comes within the letter of the law he must be taxed, however great the hardship may appear
to the judicial mind to be, on the other hand if the Crown seeking to recover the tax cannot bring the subject
within the letter of the law, the subject is free, however apparently within the spirit of the law the case might
otherwise appear to be. If there be admissible, in any statute, what is called an equitable construction,
certainly such a construction is not admissible in a taxing statute, where you can simply adhere to the words
of the statute.’
- Partington v. Attorney General (1869) LR HL 100 per Lord Cairns

‘In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is
no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied’
- Cape Brandy Syndicate v. IRC [1921] EWCA Civ 1 per Rowlatt J
‘Parliament in its attempts to keep pace with the ingenuity devoted to tax avoidance may fall short of its
purpose. That is a misfortune for the taxpayers who do not try to avoid their share of the burden, and it is
disappointing to the Inland Revenue. But the court will not stretch the terms of taxing Acts in order to
improve on the efforts of Parliament and to stop gaps which are left open by the statutes. Tax avoidance is an
evil, but it would be the beginning of much greater evils if the courts were to overstretch the language of the
statute in order to subject to taxation people of whom they disapproved.’
- Vesty’s (Lord Executors) v. Inland Revenue Commission (1949) 31 T.C. 1 per Lord Normand

The consequence of the traditional approach is that:
▪ the courts were unwilling to stretch the express language of the taxing statute to cover situations not
expressly provided for by the law or to ‘punish’ what may be considered as unacceptable behaviour.
▪ It may be argued that this approach is based on the age-old principle that the express mention of a thing in a
statute is to the exclusion of the other (expressed in the Latin maxim, expresio unius est exclusio ulterious).
This is coupled with the fact that a taxing statute must be sufficiently clear such that any act which is
complained of as being a tax avoidance act would come under the express terms of the Act.
▪ Additional Cases
▪ Ayshire Pullman Motor Services and DM Richie v. I.R.C [1929] 14 TC 754
▪ IRC v. Duke of Westminster (1936) AC 1

THE MODERN APPROACH
▪ In the course of time, the legislature, and the courts were outsmarted by the skill, determination and resourcefulness of
taxpayers. As such the courts began to explore different approaches to nip the canker of tax avoidance in the bud.
▪ Lord Greene MR, in Lord Howard de Walden v. The Inland Revenue Commission [1942] 10 ITR 90 (CAL), expressing the
shift of the judicial mind noted thus:
‘For years a battle of manoeuvre has been waged between the legislature and those who are minded to throw the
burden of taxation off their own shoulders on to those of their fellow-subjects. In the battle the legislature has often
been worsted by the skill, determination and resourcefulness of its opponents, of whom the present appellant has not
been the least successful. It would not shock us in the least to find that the legislature has determined to put an end to
the struggle by imposing the severest of penalties. It scarcely lies in the mouth of the taxpayer who plays with fire to
complain of burnt fingers.’

The Modern Approach (cont.)
In even more forceful words, Lord Simmonds stated in the case of Latilla v. IRC [1943] A.C. 377 at 381:
‘My Lords, of recent years much ingenuity has been expended in certain quarters to devise methods of
disposition of income by which those who were prepared to adopt them might enjoy the benefits of
residence in this country while receiving the equivalent of such income without sharing in the appropriate
burden of British taxation. Judicial dicta may be cited which point out that however elaborate and
artificial such methods may be, those who adopt them are 'entitled' to do so. There is, of course, no doubt
that they are within their legal rights, but that is no reason why their efforts, or those of the professional
gentlemen who assist them in the matter, should be regarded as a commendable exercise of ingenuity or as
a discharge of the duties of good citizenship. On the contrary, one result of such methods, if they succeed,
is, of course, to increase pro tanto the load of tax on the shoulders of the great body of good citizens who
do not desire, or do not know how, to adopt these manoeuvres.’

The Modern Approach (cont.)
The modern approach to combating tax avoidance is to the effect that the court must look beyond the express
words or text of a taxing statute to consider the intention of the legislature and also ascertain the transaction as a
whole to ascertain whether in substance it is in tandem with the intent of the taxing statute.
Against this background, the test for consideration by the court is to:
▪ first, consider the text of the taxing statute and the underlying context within which it was brought into
being;
▪ second, ascertain the legislative intent behind the said provision; and
▪ lastly, consider as a whole the transaction or series of transactions which is before the court.
Where the transaction was covered by the text of the taxing statute but on considering it as a whole the object
was to defeat the legislative purpose, the court would not give effect to the transaction.

Lord Wilberforce in W.T Ramsey v. Inland Revenue Commission [1981] AC 300 stated thus:
‘Given that a document or transaction is genuine, the court cannot go behind it to some supposed
underlying substance. This is the well-known principle of Inland Revenue Commissioners v. Duke of
Westminster [1936] A.C. 1. This is a cardinal principle but it must not be overstated or overextended. While
obliging the court to accept documents or transactions, found to be genuine, as such, it does not compel
the court to look at a document or a transaction in blinkers, isolated from any context to which it properly
belongs. If it can be seen that a document or transaction was intended to have effect as part of a nexus or
series of transactions, or as an ingredient of a wider transaction intended as a whole, there is nothing in the
doctrine to prevent it being so regarded: to do so is not to prefer form to substance, or substance to form.
It is the task of the court to ascertain the legal nature of any transaction to which it is sought to attach a
tax or a tax consequence and if that emerges from a series or combination of transactions, intended to
operate as such, it is that series or combination which may be regarded.’

Other Cases
▪ Furniss v. Dawson [1984] AC 475 per Lord Brightman
▪ Johnson v. Jewitt (1961) 40TC 231
▪ Greenberg v. IRC [1971] 3 All ER 136
▪ Floor v. Davis (1979) 52 TC 609
▪ IRC v. Plummer [1980] AC 896
▪ Chinn v. Hochstrasser [1981] 2 WLR 14
▪ IRC v. Burmah Oil Company (1981) T.C. 200

DOCTRINE OF FORM AND SUBSTANCE
This is an improvement on the modern approach, though it may be considered as a separate approach as seen
in some of the available literature. The doctrine is to the effect that in considering any given transaction, the
court must:
▪ first consider the effect of the transaction as between the parties, and
▪ the respective rights and obligations between the parties must be ascertained in accordance with the
general principles of law.
▪ In Furniss v. Downson , Lord Brightman opined thus:
‘I suggest, form and substance are to be distinguished. Once a basic doctrine of form and substance is
accepted, the drawing of precise boundaries will need to be worked out on a case-by-case basis.’

The rules pertaining to the doctrine of form and substance are:
▪ The descriptions attached to a transaction by the parties are not conclusive and decisive of the its true nature.
Thus, the court is prepared to go beyond the mere labels of a transaction to ascertain its true import.
▪ The rights and liabilities created by a sham transaction ought to be disregarded by the court. Thus, if in
substance, the transaction is fictitious, the court must disregard it. (This accords with section 34(1)(a) of Act
896).
▪ Where the transaction is genuine, the court must not end there but must consider the surrounding
circumstances under which those rights were created to determine whether they serve any commercial
purpose. If not, the Court would disregard the transaction.

LEGISLATIVE APPROACHES TO TACKLING TAX AVOIDANCE
The legislative response to tax avoidance involves specific and general anti-avoidance legislation.
SPECIFIC ANTI-AVOIDANCE LEGISLATION
▪ Change in accounting year/basis period – A taxpayer is to file returns within 4 months after the end of the basis
period. A change in accounting year/basis period may produce a tax benefit through the deferment of the date of
payment of taxes. However, section 18 (3) of Act 896 and paragraph 4.2 of Practice Note Number DT/2016/007
have dealt with this.
▪ Change in accounting methods – per section 19 (5), the Commissioner-General (C-G) may direct a taxpayer to use
a particular accounting method which better reflects the income of the person for tax purposes. In the same way,
the C-G may approve an application by a taxpayer to change accounting methods. In effecting the change,
adjustments will be made in the basis period following the change to ensure that there are no omissions or
multiple entries of any income or expenditure item. This is to forestall possible tax avoidance.

LEGISLATIVE APPROACHES (cont.)
▪ Indirect payments – indirect payments made for the benefit of the taxpayer. A taxpayer may assign payments to
another person to reduce tax liability. Per section 27 of Act 896, the C-G can treat the taxpayer as payee or payer for tax
purposes. (Compare with Vestey’s (Lord Executors) v. IRC [1949] 31 TC 1)
▪ Income splitting – similar to indirect payments (above) but occurs in respect of income to reduce the income and
consequently income tax since the income tax in Ghana is a progressive tax. This is countered by the provisions of
section 32 of Act 896 which empowers the C-G to give a notice in writing to the taxpayer and to prevent the reduction in
tax payable intended by the income splitting.
▪ Change of Ownership – Per section 62 of Act 896, where an entity changes its underlying ownership by more than 50%
within 3 years, the entity will be deemed to have realised its assets and liabilities. (see section 38 for an understanding
of realisation) As a consequence of this deeming, the entity is not permitted to benefit from the deduction of financial
costs (s. 16(3)), losses (s. 17(1)), deductions related to bad debts (s. 23(2), (4), (5)) or carrying back unrelieved losses (s.
24(6)).

▪ Thin Capitalisation – Section 10 of Act 896 allows a deduction on interest paid on loans while section 130(4)(f) disallows
a deduction of dividends paid by a company. Thus, some taxpayers increase their debt-to-equity ratio to affect their tax
liability to their benefit. Section 33 counters thin capitalisation efforts of taxpayers by pegging the allowable debt-to-
equity ratio at 3:1. Regulation 20 of the Income Tax Regulations, 2016 (LI 2244) explains the terms debt and equity. (See
page of 259 of Kunbour B, Ali-Nakyea A and Demitia WKO, Law of Taxation in Ghana (5th edn, Type Publishers 2022) for
an illustration of debt versus equity financing and how it impacts tax liability.)
▪ Capitalisation of Profits and Deemed Distribution in respect of Dividends – According to section 59 (1) of Act 896,
there is withholding tax on dividends paid to shareholders except as exempted by law eg under s. 59(3). Where the C-G
is satisfied that a company controlled by not more than 5 persons and their associates is not distributing a reasonable
part of its income as dividend to its shareholders within a reasonable time after the end of the basis period, the C-G
shall, by notice in writing, deem a part of the income of that company to be dividend paid to its shareholders. This is
done to prevent a possible tax avoidance scheme. (Compare the case of Cape Brandy Syndicate v IRC [1921] 1 KB 64).

▪ Abuse of Temporary Concessions – there are various concessions
made available in the sixth schedule to businesses that satisfy various
conditions. Eg. Freezone enterprises, businesses started by young
entrepreneurs etc. To prevent abuse of these concessions, section 134 (3)
precludes a person from benefiting from the concession if an associated
person has or is benefiting from it. This restriction however does not apply
to two associated individuals who are resident persons (s. 134 (4)). (note
the difference between individuals and entities).
▪ Also, a narrow construction is applied to interpreting this section as well
as scrutinizing a person for eligibility for the concession. In case of transfer
of ownership, the new owner takes the unexpired term of the concession.

▪ Reversal of Cessation Rule (Doctrine of Source) – under section 3 (2) (a) of Act 896, income of a resident
person from that person’s employment, business or investment is taxable whether or not the source of the
income has ceased. This is an anti-avoidance provision because, it prevents the taxpayer from avoiding tax by
claiming the source of income has ceased.
▪ Ring Fencing – with respect to special industries like petroleum and mining operation, sections 64 and 78
operate to prevent the setting off of the expenses incurred in one petroleum or mineral operation against
another/separate operation. For the purposes of these sections, the operations conducted right before and
after the date of approval of a petroleum or mineral development plan are considered to be separate
operations.
NB. The list above is inexhaustive. Refer to the resources listed on the reading list for other specific anti-
avoidance provisions.

GENERAL ANTI- AVOIDANCE RULE/LEGISLATION
Section 34 of Act 896 makes a general provision regarding tax avoidance. Per this provision,
the Commissioner-General (C-G) may re-characterise or disregard an arrangement or part of
it if that arrangement is carried out as part of a tax avoidance scheme. A similar provision
appears in section 99 of Act 915.
The features of such an arrangement, per the section are:
▪ the arrangement is fictitious or does not have a substantial economic effect; or
▪ the form of the arrangement does not reflect its substance.

Arms- length transaction
▪ To forestall tax avoidance, the law requires associated persons to ensure that
their transactions always accord with arm’s length standards as provided under
section 31 of Act 896.
▪ OECD defines arm’s length transactions as ‘a transaction among parties, each of
whom acts in his or her own best interest.’
(https://www.oecd.org/ctp/glossaryoftaxterms.htm#A )
▪ Arm’s length standards require persons in controlled relationships to quantify,
characterise, apportion and allocate amounts to be included in or deducted from
income to reflect an arrangement as it would be made between independent
persons. See section 128 for the full definition of controlled relationship.

Transfer Pricing
▪ For the purposes of ensuring arm’s length transactions,
transfer pricing rules, among others, are applied to
recharacterize arrangements between persons in controlled
relationships. In Ghana, the provisions of the Transfer Pricing
Regulations, 2020 (LI 2412) which was made pursuant to
section 31 (3) of Act 896 apply.
▪ For international perspectives on TP see also
▪ OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2017, OECD
Publishing, Paris, https://doi.org/10.1787/tpg-2017-en
▪ ‘United Nations Practical Manual on Transfer Pricing for Developing Countries | UN DESA
Publications’ (United Nations) <https://desapublications.un.org/publications/united-nations-practical-
manual-transfer-pricing-developing-countries>

EFFECTS OF ANTI-AVOIDANCE MEASURES
• Arbitrary tax regimes – what may be a tax avoidance scheme for one business or individual
may be an innocent business purpose transaction. As such, indiscriminate application of anti-
avoidance legislation may result in arbitrary sanctions by law.
• Stifling of business growth – Adherence to anti-avoidance legislation may result in a downturn
in business growth. eg to avoid being caught under section 59 (8) a company may declare
dividends as against accumulating capital reserves.
• Greater tax planning and more sophisticated avoidance schemes – over-regulation may result
in greater planning to outwit the law since human ingenuity and technology has often gone
ahead of law reform.

TAX EVASION - Definition
Tax evasion is an ‘intentional illegal behaviour, or
behaviour involving a direct violation of a tax law, in
order to escape tax payment.’
- Rogers-Glabush J (ed), IBDF International Tax Glossary (7th rev
edn, IBDF 2015) 185
‘The willful attempt to defeat or circumvent the tax law
in order to illegally reduce one’s tax liability.’
- Garner BA and Black HC, Black’s Law Dictionary (8th ed, West
Publishing Co 2004) 4573

FORMS OF TAX EVASION
Common forms in which people evade tax include the following:
▪ Keeping different business records – some taxpayers may keep different sets of
accounting books to record business transactions. One book records the actual
business transactions, and the other is doctored for the purpose of reducing tax
liability.
▪ Working extra jobs for cash – some tax evaders work in other jobs other than
their regular jobs but the income received from such jobs are paid in cash rather
than by cheque or through bank accounts, hence there are no legal records of
the transactions, and the income is not reported to the tax authorities.

FORMS OF TAX EVASION (cont.)
▪ Engaging in barter trade – Some people, for the purposes of evading tax, prefer to
engage in batter trade rather than trade in money. When payments are made in kind,
such income is seldom reported as it is difficult to trace for tax purposes.
▪ Dealing in cash transactions – some tax evaders pay for goods and services with cash
or cheques, drawn out to ‘cash’ and not the payee’s name. This may make it very
difficult for the GRA to trace and tax such transactions.
▪ Issuing unauthorised receipts – some providers of goods and services evade tax by
issuing receipts and invoices that are not the ones authorised by the revenue
authorities for such transactions. E.g. Issuing receipts other than VAT receipts. This is
done to under-report income and consequently pay less tax.

APPROACHES TO TACKLING TAX EVASION
Tax evasion is often checked through legislative intervention. On failure to comply with an
obligation under a tax law, a person may be found liable of an offence and be punished
accordingly. The Revenue Administration Act, 2016 (Act 915) classifies these liabilities under
interests, penalties and offences.
▪ Interests – a taxpayer may become liable to pay interest in any of the following
circumstances:
▪ Under-estimating income tax payable (s. 70 of Act 915)
▪ Failure to pay tax (s. 71 of Act 915)

APPROACHES TO TACKLING TAX EVASION (cont.)
▪ Penalties – a taxpayer may incur some penalties for various offences under a tax law such
as:
▪ Failure to maintain documents as required (s. 72 of Act 915)
▪ Failure to file tax returns (s. 73 of Act 915)
▪ Making false or misleading statements (s. 74 of Act 915)
▪ Attempting to collect tax without authorisation (s. 75 of Act 915)
▪ Aiding and abetting the commission of an offence under Act 915 (s. 76 of Act 915)

▪ Offences – a taxpayer commits a tax offence in the following circumstances:
▪ Failure to comply with the provisions of a tax law (s. 78 of Act 915)
▪ Failure to register under a tax law (s. 79 of Act 91)
▪ Failure to pay tax (s. 80 of Act 915)
▪ Making false or misleading statements (s. 81 of Act 915)
▪ Impeding tax administration (s. 82 of Act 915)
▪ An authorised person receiving reward unlawfully or aiding a taxpayer to defraud government (s. 83(1) of
Act 915)
▪ Attempt or collection of tax by unauthorised person (s. 83(2) of Act 915)
▪ Causing harm to a tax officer (s. 85 of Act 915)

▪ Tax evasion may also be reduced by the requirement of providing Tax
Identification Numbers (TIN) and Tax Clearance Certificates for specified
transactions as provided under part II of the first schedule to Act 915.
▪ NB. By the judgment in the case of Center for Juvenile Delinquency v. GRA and AG
(2019) JELR 66221(SC), the requirement of providing Tax Identification Numbers
(TIN) for court processes has been outlawed. Note however that Act 915 is yet to
be amended in that regard.

CONCLUSION
▪ In this lecture, we have discussed tax avoidance and evasion, the forms they
may take, the judicial and legislative interventions to tackle them and a critical
examination of these approaches.
▪ Per Lord Templeman in Matrix Securities Ltd v. IRC [1994] 1 All ER 769; [1994] 1
WLR 334 “Every tax avoidance scheme involves a trick and a pretence. It is the
task of the Revenue to unravel the trick and the duty of the court to ignore the
pretence.”
▪ And as remarked by Lord Denning in Re Weston’s Settlement [1968] 3 All ER
338 at 342, “The avoidance of tax may be lawful, but it is not yet a virtue.”

END OF LECTURE 2
ESSENTIAL READING –
▫ Income Tax Act, 2015 (Act 896) as amended
▫ Income Tax Regulations, 2016 (LI 2244), Regu. 20
▫ Revenue Administration Act, 2016 (Act 915) as amended
▫ Transfer Pricing Regulations, 2020 (LI 2412)
▫ Adjei-Djan K, Income Tax Law in Ghana – Exposition and
Critique (Black Mask 2020) Chapter 15
▫ Kunbour B and Ali-Nakyea A, Demitia WKO, Law of Taxation
in Ghana (5th ed, Type Publishers 2022) Chapter 6
▫ All relevant cases and materials per the course outline and
class discussions.

PREVIEW LECTURE 3
TOPIC – THE CONCEPT OF INCOME AND INCOME TAX
JURISDICTION OF GHANA
ESSENTIAL READING –
 Income Tax Act, 2015 (Act 896) as amended
 Ghana Revenue Authority Act, 2009 (Act 791)
 Adjei-Djan K, Income Tax Law in Ghana – Exposition and Critique (Black Mask
2020) Chapters 3 – 5, 17, and 19.
 Ali-Nakyea A and Alua JA, ‘Digital Taxation in Ghana: Putting the Cart Before
the Horse’ (2023) Tax Notes International 1477
 Ali-Nakyea A and Demitia WKO, ‘The Need for a Substantial Presence Test in
Ghana’ (2015) Tax Notes International 763
 Avi-Yonah RS, International Tax Law (2nd edn, Edward Elgar Publishing 2019),
chapters 1 – 3

PREVIEW LECTURE 3
ESSENTIAL READING (cont.) –
 Demitia WKO, ‘The Taxation of Foreign-Source Income of Ghana
Residents’ (2016) 83 Tax Notes International 621
 Kunbour B and Ali-Nakyea A, Demitia WKO, Law of Taxation in Ghana (5th
ed, Type Publishers 2022) Chapters 2 and 8
 Gawu DA, ‘Is it Time for Change? - An Overview of Ghana’s Legal Regime
on the Taxation of Independent Personal Services and its Effect on Tax
Revenue Generation’ in C Dowuona-Hammond and Others (eds)
Mobilising the Law for Ghana's Future: Appraising to Revolutionise (UG
2020) 301
 All relevant cases and materials per the course outline and class
discussions.

GOT ANY IDEAS OR
QUESTIONS?
Bring it up for discussion…

THANK YOU!
ACKNOWLEDGMENTS
The foundational work of Dr. Chris Adomako-Kwakye in the preparation of these lecture slides is
acknowledged and highly appreciated.
MRS. DELALI A. GAWU
delaliagboada@gmail.com/daagboada.law@knust.edu.gh
Faculty of Law, KNUST
Jan – Feb, 2024

Law 477 - L2- Tax Avoidance and Tax Evasion.pdf

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