Welcome back once again on board to the taxation discourse.

This column is purposely meant to simply dissect technical and theoretical tax knowledge into simpler and practical terms (understanding) to the taxpayer. By and large, it is to better create tax awareness, acquaint and bring insightful tax education and information that is of paramount importance to the taxpayer and any interesting person hoping to through his/her hat in the business spectrum of the country, as either trader (s) or investor (s). In this theme, we will discuss extensively on the 'modus operandi' of tax returns, non-requirement needs for the submission/ furnishing of tax returns, challenges and its importance as a catalyst in complementing efforts in the process for ascertaining the computation of taxes.

Today's discussion is a continuation from last week's edition and we do hope to give you more and easy digestible tax information to quench your thirst for updated tax knowledge. First, I must lodge this formal Disclaimer for the benefits of the general readers of this column that, all the views expressed are that of the Author through dissecting information as contained in the Income & Sales Tax Act, 2004 for the benefit of the taxpayers' ease of purposeful referencing for their tax obligations. In this regard, any inconsistency or errors are deeply regretted by the Author.

Remember human perceptions, understanding (comprehension) and taste do differ for which truly there is no perfect convergence of knowledge production without a critique or critics on it and would like to apologise for any shortcomings this column might bring to you all if it does not meet your tax needs and expectations. It all depends on the scale and trend of limiting your discussions on the topic and in trying your level best in achieving the purpose of its theme. I crave for your feedbacks, comments and question to better cater and tailor your tax needs.

Tax returns play a multi-dimensional function in the area of taxation management and collection. Thus, this makes tax returns not to be an ends to a means with an objective in providing holistic view of taxpayers' tax declarations in the final analysis for tax computations. However, the presence of people’s perceptions towards tax laws and in meeting their tax obligations from varying degrees has created a problematic challenge that requires timely intervention of sound strategies to find pragmatic solutions to such evolving challenges in the spectrum of tax management. Critics of tax returns have given wrong analogies on the rationality of tax returns.

 Their wrong perceptions are premised on the ‘no baseline theories’ to flout the ‘rules of the game’ as a means to constantly avoid and to a greater extent evade the payment of taxes to the most possible way and in resorting to the usage of the avoidance tax handle schemes. For many, find it difficult to understand the need for furnishing tax returns as a catalyst in facilitating tax payment. In this regard, understanding the rationale for tax return would to a large extent increase the level of tax awareness and inject a positive frame of mind towards their tax obligations (voluntary compliance). To this, tax returns plays a fundamental role in the computation and assessment of taxes, hence serving as a pre-assessment tool for tax computation.

The importance of tax returns cannot be under-estimated considering its spectacular importance in taxation. As a result, the benefits of tax returns to the taxpayer outweigh that of the Tax Authority. The reason being that,  it attaches high regards in giving the former more deciding role and responsibility in the provision of the needed and statistical data that is/or  will be used in verifying the profits/or gains received against the allowable expenses in the final analysis and in particularly during the course of computing and assessing tax liability (ies).

Taxation as it name implies needs not to be explained further again since it has already been discussed at length in our first two publications on this column. For reference purposes of linking the two concepts in their shared relationship really warrants the adoption of the theme – ‘Taxation and Tax Returns’. The primary objective of taxation is to raise or collect revenue for government in meeting its development needs in all the sectors of the economy, ranging from health, agriculture, education, infrastructural development, roads, energy and security.

Besides the primary objective of taxation, it also imposed to function from differing angles for purposes of ensuring:
a. economic stability;
b. optimum allocation and utilisation of resources;
c. social welfare on products that are harmful to society such as excise duty on wines, cigarettes;
d. protection/or support policy for infant industries, and
e. Creation of employment opportunities.

All these are possible through government’s resolve commitment in providing the political will and necessary support, and the tax authority’s drive in ensuring that the tax base is broaden, tax burdens are minimised and procedures are simplified/ streamlined to achieve meaningful economic growth and development. Achieving such objective will no doubt increase taxpayers’ civic and moral responsibilities towards tax obligations.

Non-tax return requirements
Tax returns are not required in the event in which the only earned income is an employment income of the individual. The justifying reasons has been that the person does not earn an extra income and is therefore exempted from furnishing tax return on such issues, by the Laws governing taxation in The Gambia (Income & Sales Tax Act, 2004).  

This Act further justifies this on the following in the same Act:
a. employment income from which tax has been withheld under section 89; or
b. Income from which tax has been withheld as a final tax under section 102, respectively.
Concisely, these section (s) specifically give an explanatory evidence on the ‘nitty gritty’ of such legal basis, exempting tax returns if the income earned is only employment income as contained in the said Acts – (Income & Sales Tax Act, 2004 and Income & Sales Tax (Amendment) Act. 2007).

In the same Act, The Commissioner General as the Chief Executive Officer (CEO) is empowered by the Tax Laws as contained in the said Income & Sales Tax Act, 2004 and the Income & Sales Tax (Amendment) Act 2007. These Acts provides the legal basis for the Commissioner General to exercise the powers of requesting a person or a Body of Persons (Companies) to furnish him/her within a reasonable time tax returns. Failure of which will result to the application of the ‘hard rules’ in ensuring that a leverage, understanding and non-compromising penalties are effecting on the defaulting person (taxpayer).

Requirementary aspects in filing and submitting or furnishing tax returns
A.    Request for tax returns;
B.    Read and fill the requested information as provided on the form;
C.    Attach necessary copies of required documents such as books of accounts to substantiate proofs of claimed allowable expenses, profits/or gains received;
D.    Submit the filled returns to the nearest tax office as a proof of adhering to the principles of ‘tax returns’

Procedural methods of tax returns
For example in filling returns of salaried employees (PAYE) the following needs to be considered: Employers are required by the tax laws within a reasonable time to file and furnish tax returns of their PAYE tax by the 15th Day of the following month. For example, after the end of the month; say January the PAYE deductions are due for payment by the 15th Day of February. In this, a special form called F26 is designed for PAYE deductions and for which employers must be cognisant of the obligatory requirements of information to be provided on the fields of the PAYE tax deductions forms. This must include names of payees, earned/ paid salaries and tax deductions made for ease of referencing and verification by the tax office in the final analysis of computing the right and required tax due for
payment.

Benefits of filing and submitting tax returns
A number of reasons were identified and among these were for the purposes of ascertaining the information provided, craving a justifiable claim (s) allowable by the tax laws and in increasing the culture of voluntary compliance, among loads of others. Consequently, the following are identified as the benefits attuned in the act of filing and submission of tax returns:
A. simplifies tax procedures;
B. reduces the cost of compliance;
C. addresses tax complexities of any kind, such as the allowable and non-allowable deductions/ claims/ expenses in the computation of taxes;
D. rectifies wrongful inputs of claims;
E. identify and notify any form of underpayment or over-payment of taxes; and
F. facilitates participatory and involvement approach.

The benefits can only yield fruits if individuals and businesses keep records of their tax transaction receipts, incurred expenses and book of accounts as supporting documents to refer to and if requested by the tax office for purposes to substantiate proofs. The absence of such documentary evidence will result to the application of the ‘Best of Judgement’ principles as the way of computing taxes. In this regard, a person carrying a business is required by the tax laws to be in possession of his/her books of accounts, receipts. This assist in substantiating proof of any allowable claims, allowances or expenses within the ambits of the Income and Sales Tax Act, 2004.

To be continued!!!!.
For any contribution, you can email the columnist on: assubj78@yahoo.co.uk
"The Author is the Senior Compliance & Strategy Officer of the Gambia Revenue Authority"