VAT Flat Rate Scheme to aid compliance – GRA

Mr. Ntim

Mr. Ntim

The newly introduced three per cent VAT Flat Rate Scheme (VFRS) is to aid tax compliance rather than lead to the increase in prices of goods and services, the Ghana Revenue Authority has insisted.

The old approach, according to Emmanuel Ntim, Commissioner General, GRA, suffered low compliance due to the extensive paperwork in filing VAT returns.

“The VFRS is replacing the old system to make it easier for taxpayers to comply. It is simpler and all the considerations undertaken so far do not suggest prices of goods and services will go up,” he stressed.

Speaking at a sensitisation programme for some media personnel in Accra last Friday, Mr Ntim said while the old 17.5 per cent Input-Output Tax was charged on Value Added, the new three per cent Flat Rate was charged on turnover.

The event was to educate journalists on the new tax policy, which implementation commenced in July 1 this year.

The scheme is part of reforms the government highlighted in the 2017 Budget Statement promised to simplify the process for VAT compliance and reduce tax evasion.

Its implementation was delayed to allow the GRA to engage more broadly with stakeholders until July 1 when businesses were directed to start.

Despite assurances by the Ministry of Finance that the scheme would not lead to an increment in prices of goods and services, some business groups have expressed reservations and inhibitions about the new approach.

Explaining the policy, Nathan Nettey, Deputy Commissioner in charge of Policy, GRA, said the scheme aimed at addressing the loopholes in the collection of some taxes from businesses, especially those in the wholesale space.

He said GRA was prepared to engage the manufacturers on their concerns to aid the smooth implementation of the tax.

He further rejected assertions that it would increase the cost of doing business in the country, observing that several scenarios considered revealed that, in some situations, the tax obligations of some firms would reduce.

email
Print Friendly

Leave a Comment