Question Tag: Provisional Assessment

a)
i) Provisional Assessment

• It is an assessment that emanates from the office of the Commissioner-General, which indicates a person’s tax liability based on the Commissioner-General’s best judgment.
• It indicates the chargeable income and the tax charged.
• It also indicates the manner of objection.
  (3 marks)

Self Assessment

• This is a mode of assessment where the onus of determining the tax liability and the payment of the tax is on the taxpayer.
• The taxpayer is expected to furnish the Commissioner with an estimate of the chargeable income and the tax liability at the commencement of his basis period.
  (3 marks)

ii) Rationale for the Shift from Provisional Assessment to Self Assessment

• Under provisional assessment, there is usually a delay in the issuance and service of the notice of assessment. Self-assessment avoids delays since the assessment is made by the taxpayer.
• Under self-assessment, there is trust between the taxpayer and the tax administrator.
• There is a high frequency of objection under provisional assessment, but self-assessment minimizes the rate of objection since the taxpayer is involved in the determination of the tax liability.
• The cost of collection is higher under provisional assessment, but self-assessment reduces collection costs to the Revenue.
• Under provisional assessment, officers are much occupied in issuing notices and have less time for other matters, but self-assessment saves time for Revenue Officers, allowing them to review more significant cases.
• Self-assessment tends to make taxpayers more conscious of their tax obligations since they are involved in the process.
• Self-assessment promotes tax compliance and good citizenship.
  (8 marks)