Minority threatens to drag GRA to court …over reintroduction of 3 % VFRS

Mr Ato Forson

Mr Ato Forson

The Minority in Parliament has hinted that it will go to court over the reintroduction of a three per cent Value Added Tax Flat Rate (VFRS), if it is not halted.

In the view of the Minority, the reintroduction of the VFRS is not in sink with the Value Added Tax Act, Act 870.

At a hurriedly organised press conference in Parliament yesterday, after meeting industry players over the tax, the Minority said the Ghana Revenue Authority’s (GRA) practice which sought to impose the tax is illegal and urged the authority and the government to halt the move with immediate effect.

“We wish to serve notice to the GRA to immediately halt this illegality. Failure to do it will mean that we will go to court to compel them to stop perpetuating this illegality.

“What they are trying to do is to impose a VAT through the backdoor,” Minority Spokesperson on Finance, Casiel Ato Forson stated.

The threat followed a circular issued by the GRA advising all retailers, wholesalers, including importers to start implementing the tax.

According to the Authority, the VFRS collection and accounting mechanism under which a registered taxpayer, who is a retailer, wholesaler or importer of goods shall have a marginal Value Added Tax (VAT)/National Health Insurance Scheme (NHIS) levy rate of three per cent, representing the net VAT payable on the value of taxable goods supplied.

In the notice, the GRA added that, the tax is an alternative to the standard scheme method of accounting.

“The marginal rate of the three per cent represents the net VAT payable and is the difference between the output tax and the input tax of a wholesaler/retailer if the taxpayer were operating the Standard Rate Scheme,” it said.

Addressing the press, however, Mr Forson said slashing the 17.5 VAT in line with the government’s policy was supposed to take effect from April 1 this year but was deferred to a later date to do a consultation with stakeholders only to introduce the three per cent.

He said the action of the government violated sections 34, 48 and 53 of the Amended VAT Act and must not be entertained and that should it fail to scrap the three per cent, the only alternative available to them would be to head to the court for interpretation.

Mr Isaac Adongo, a member of the Finance Committee and MP for Bolgatanga Central, backing his colleague said the decision of the government would lead to price hikes which would bring hardship onto the final consumer.

Meanwhile, the Finance Minister, Ken Ofori-Atta said the government would reconsider the concerns of the Minority, but said the government was well within the law.

He debunked claims by some of the industry players that the introduction of the tax would result in price hikes.

Asked if they would consider suspending the tax in the meantime, Mr Ofori-Atta said that is not an option but expressed confidence that an amicable solution would be reached at their next meeting on Monday.

By Julius Yao Petetsi

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