[ 2016-06-06 ]

Government denies reducing VAT flat rate scheme
The Ministry of Finance has told Citi Business
News government has not approved the 3% Vat Flat
Rate system as speculated by the Ghana Union of
Traders Association (GUTA).

The Ministry insists that the 17.5% VAT charge
still holds.

This comes days after GUTA raised concerns over
the tax; indicating that government has sanctioned
a reduction to 3 percent.

Last week, the Association raised concerns over
the 3% Vat Flat Rate system which it cited as
brooding confusion between the association’s
members and officials of the Ghana Revenue
Authority (GRA).

GUTA explained that the 3 percent Vat Flat Rate
which was increased to 17.5%, was reverted by
government to shed off some tax load on industry
players.

But speaking to Citi Business News, the head of
tax policy at the Ministry of Finance, Anthony
Dadzra insisted the 17.5 % rate has not been
changed.

“It is only Parliament that passes law; if
parliament has not changed the law, then GUTA has
no legal backing. We had meetings with them and we
agreed it is something we could consider but we
still need to go back to parliament,” he
stated.

Mr. Dadzra further noted that the VAT flat rate
even if changed, will be more than the estimated
3%.

According to him, the 3 percent was what used to
be the case when VAT was 15% but now that the rate
is at 17.5%, the rate will definitely be more.

“We never agreed to the 3%. If even we agreed,
it will be more than 3%. We are considering it
because we agree it is a good suggestion but since
it has not gone to Parliament there is no way we
can enforce it,” he stressed.

Anthony Dzadzra however stated that the ministry
is still considering GUTA’s offer and will hold
meetings with them to arrive at a conclusion.

VAT Flat Rate System (VFRS)

The VAT Flat Rate System is a special method for
collecting and accounting for Value Added Tax
(VAT)/ National Health Insurance Levy (NHIL).

It is designed for traders operating in the retail
sector.

Under the VFRS, registered retailers of taxable
goods shall charge VAT/NHIL at a marginal rate of
3% on the value of each taxable item sold.

Also, retailers with annual turnovers of between
GH¢100 million and GH¢1.2 billion are expected
to pay three per cent of their turnovers as Value
Added Tax (VAT).

Source - citifmonline.com

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