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).

By: Jessica Ayorkor Aryee/citibusinessnews.com/Ghana