It has now been established that the Ministry of Youth and Sports did not withhold taxes on the bonuses and other earnings of players and officials of the senior national team, the Black Stars, from the just ended World Cup tournament in South Africa despite prior notification by the Internal Revenue Service to do so. According to the Chief Director of the ministry, Mr Abdulai Yakubu, since the beginning of the payment of bonuses to players, there had not been any occasion that taxes had been deducted from them and so the ministry continued with the convention. 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. "As it is now, it will be difficult to go back to the players to collect taxes because they are all scattered," he told the Daily Graphic in Accra yesterday when it sought clarification from him on the issue, which has gained much public attention recently. The failure by the ministry to deduct taxes from the bonuses and other earnings of players and officials of the team is likely to cost the nation hundreds of thousands of Ghana Cedis in tax revenue. Section 8(1)(2) of the Internal Revenue Act, 2000 (Act 592) states in part, "A person's income from an employment is that person's gains or profits from that employment. The gains and profits from an employment of a person include any allowances or benefits paid in cash or given in kind to, or on behalf of that person from that employment..." Prior to the departure of the Black Stars to South Africa, the Commissioner of the Internal Revenue Service (IRS) had written to the Ministry of Youth and Sports to remind it, as the withholding tax institution, to endeavour to deduct taxes from the bonuses and earnings of the players, failing which the ministry would suffer a penalty. The essence of the letter, according to the IRS, was to avoid a situation where the ministry would later plead ignorance of its tax obligation. Mr Yakubu said some of the players thought by playing for the Black Stars in such international competitions, they were rendering a 'service to the nation and so they did not see the need for their earnings to be taxed, adding that any attempt to deduct taxes from players' bonuses might cause displeasure among them. Asked whether the deduction of taxes from the bonuses and the earnings of the players and the officials of the team had not been discussed between the ministry and the Ghana Football Association (GFA) prior to the World Cup campaign, Mr Yakubu said he was not aware of any such discussion. He said the bonuses and earnings of the players were generated by the GFA and submitted to the ministry, which then forwarded them to the Castle for payment to be effected. He said if the GFA had considered the tax component of the bonuses of the players at the stage of preparing the budget; the problem would not have arisen. The revelation by Mr Yakubu has taken the controversy over the payment of taxes on the bonuses and other earnings of the players and the officials of the Black Stars to a new dimension as the issue continues to generate public debate and interest. . Meanwhile, the IRS has asked the GFA to provide evidence of any tax payment made in South Africa on the earnings of the players and the officials of the Black Stars in the just-ended World Cup tournament Although the IRS admitted that there was a double taxation agreement between Ghana and South Africa, it explained that the payee was required to produce evidence of such payment to the appropriate tax agency for verification. The acting Head of the Public Relations Unit of the IRS, Mr Kwasi Bobie-Ansah, told the Daily Graphic yesterday that the GFA was required to produce evidence of the tax payments it made in South Africa, while the Ministry of Youth and Sports also discharged its obligation in respect of tax Withholdings on the winning bonuses for the players and the technical handlers of the team. Responding in a separate interview, the GFA President, Mr Kwesi Nyantakyi, said the• association would provide the evidence to the IRS as soon as it got it from the Federation of International Football Association (FIFA). "It's not as if anybody is running away from taxes," he said, adding that the "GFA would provide the evidence at the appropriate time. Asked when the evidence would be made available to the IRS, he said that would depend on when FIFA made the information available. Mr Bobie-Ansah said there was no dispute over the double taxation agreement between Ghana and South- Africa but noted that whatever the tax commitments made by a resident of one country in the other, there was the need to produce evidence of such payment to the tax agency of the country of residence. He said over the years, the IRS had had some challenges with the recovery of taxes from earnings made by players and officials of national teams who participated in international tournaments, hence the decision by the commissioner to formally write to the Ministry of Youth and Sports before the Black Stars departed for South Africa to remind the ministry of its tax obligations. Reacting to an earlier publication in the Tuesday, July 13, 2010 issue of the Daily Graphic, on the intention of the IRS to recover taxes on the bonuses and other earnings made by the players and the technical handlers in South Africa, Mr Nyantakyi indicated that the association did not owe the IRS any money in taxes because of the double taxation agreement between Ghana and South Africa. "It is the bonuses that are taxable, but even that they are liable to South African tax laws, and the taxes are usually deducted at source and paid to the playing body, without the GFA having anything to do with it," he rebutted in another story published in the Wednesday, July 14,2010 issue of the Daily Graphic. Mr Nyantakyi explained that the players received two types of income - appearance fees and winning bonuses - pointing out that the appearance fees were paid by FIF A, while the government paid the bonuses. He said taxes on the appearance fees, which were paid by FIFA based on the performance of the team, were deducted at source and paid to the right agencies in South Africa. ''This has been the practice and when we went to Germany, due to the double taxation agreement with that country, we didn't pay any taxes when we returned to Ghana," Mr Nyantakyi added. The issue of whether or not players of the national football teams should pay income tax on the huge bonuses they receive during international competitions has been a discreet subject often parried away from public discourse. Public opinion on the subject is also divided, with some people suggesting that the bonuses of the players should not be taxed, in view of the enormous joy and high-profile international image that their successes bring to the nation. Others, however, insisted that the sportsmen and their officials must pay tax on their bonuses, considering the fact that public, workers who earned far less incomes were required to pay tax. Source: Daily Graphic