GRA Spells Out Taxable Bank Services
George Blankson, Commissioner General of GRA
The list of services rendered by financial institutions that would attract the 17.5 percent Value Added Tax (VAT) and National Health Insurance Levy (NHIL) has finally been released by the Ghana Revenue Authority (GRA).
A letter from GRA to the Ghana Association of Bankers (GAB) signed by George Blankson, Commissioner-General and issued in Accra recently said the fee-based services would attract the tax from July 1, 2014.
Totaling 32 in all, the list of fees, commissions and similar charges for financial services was developed by the technical committee for the implementation of VAT Act 2013 (Act 870) comprising representatives of the Ghana Association of Bankers, Ministry of Finance and GRA. It was approved by Seth Terkper, Minister of Finance.
The full list of financial services that would attract the 17.5% tax include current accounts (foreign/local) – corporate bodies only; bank draft (payment order), stopped cheques, returned cheques, commission on turnover (corporate bodies only), overdraft processing or renewal fee, revolving acceptance credit, arrangement fee for facilities, statements and certificates of balance and clearing charges.
Others are cheques for collection, standing orders, telephone banking, safe custody, cheque books, sale of cheque leaflet, replacement of lost cheque book, debit cards and credit cards, revolving credits, collateral management, transfer of documents to other banks, guarantees/bonds/tender/performance, request for forex drafts, outwards transfer: swift/telex and drafts/money orders for customers.
Also affected are travellers’ cheques, drafts, cheque lodgments (for corporate bodies and third parties only), evacuation fee (cash-in-transit), unpaid standing order, closure of accounts, remote banking services, lending fees, other loans, excluding salary advance, letters of credit (imports) and documentary bills for collection (imports).
The Finance Minister increased the VAT on goods and services to 15 percent last year from 12.5 percent to boost revenue.
Government missed its budget deficit target due to declining gold and cocoa prices and rising government wages.
He compellingly advanced arguments to support the need to extend the tax net to include many businesses that were making huge profits but operated outside the tax net when he presented the 2014 Budget statement to Parliament last November.
By the foregoing, companies that manufacture or supply pharmaceutical products other than at the retail stage are to pay VAT.
Explaining further, the Ministry of Finance, shortly after the announcement in a press release, noted that ‘we wish to state categorically that salaries, savings, deposits, loans and payment with cheques are all exempt from VAT. The new VAT Act, Act 870 only affects fees that are charged on non-core financial services such as data processing, legal, accounting, actuarial, notary and consulting services.
‘We also wish to state that this is not a new law, it has been in place since 1998. Banks were charging fees on services they were rendering. Banks are also already paying the VAT on inputs used to render these services.’
By Samuel Boadi
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