The 17.5% Value Added Tax (VAT) being charged on domestic airline fares may be withdrawn in the next budget that is if cabinet yields to pressure from the transport and finance ministries to do so.
[contextly_sidebar id=”o7dXLoPtmolPYR1EuciKbQRntj7gXWs0″]According to the transport ministry the domestic aviation sector is under a lot of pressure due to lack of incentives and several tax charges.
After months of failed negotiations between the domestic airlines, the transport and finance ministries and the Ghana Revenue Authority (GRA), the 17.5 VAT charge was implemented on July 1, 2015.
But in an interview with Citi Business News Chief Director of the Ministry of Transport Twumasi Ankrah Selby said a joint memo from the transport ministry and ministry of finance has been sent to cabinet insisting that domestic aviation sector might collapse following the introduction of VAT.
“We have already had a technical hearing with the ministry of finance and this issue came up for discussion and we told them to take that into consideration. You know VAT is part of their revenue and if you are telling them to reduce this then we must find a way to replace it which is very difficult but we put the case across to the ministry of finance during our meetings to them and we hope they would do something about it since we have also sent a joint memo to cabinet on the issue. We have and still are impressing on government to do something about the VAT because before the introduction of the VAT the passenger troop was up astronomically.”
According to him ‘as a ministry we are impressing on government to give the domestic airlines the five years moratorium or even introduce it gradually but not implement fully which, its full impact will be felt and in the end collapse the industry, Chief Director of the Ministry of Transport Twumasi Ankrah Selby said.
By: Norvan Acquah – Hayford/citifmonline.com/Ghana