VAT on banking now starts on July 1
Tamale, May 29, GNA – The implementation of the much-talked-about Value Added Tax (VAT) on non-core financial services offered by commercial banks to customers, will now begin from July 1, this year, instead of June 1, Mr Anthony Dzadzra, Head of Tax Policy Unit of the Ministry of Finance has announced.
He announced this at a pre-budget tax consultative meeting in Tamale on Thursday organized by the Ministry of Finance and the Ghana Revenue Authority (GRA), to deliberate on the status of the implementation of taxes contained in the 2014 budget, as well as collate inputs about taxes to be introduced in the 2015 budget.
The meeting was attended by business owners, representatives of financial institutions and other stakeholders.
Mr Dzadzra said the start of the implementation of the tax was rescheduled, because consultations with representatives of banks had just concluded, and it was appropriate that additional time be given to the banks to put their systems in order to ensure smooth implementation.
He said in all, about 68 non-core financial services provided by banks in the country to their customers would be covered by the tax.
Mr Dzadzra also spoke about other tax policies being considered by government to be introduced in the 2015 budget, which include reviewing the tax rate for free zones enterprises to correspond with what domestic industries paid.
He said a report commissioned by the Ministry of Finance indicated that companies operating under the free zones enclave could have still operated in the country without the current privileges they enjoyed under the free zones sector, hence the need to review some of their tax rates.
He said government would also introduce tax stamp on selected excise products, including alcohol, spirits, and water, among others, as part of measures of enforcing compliance.
He said the move would also check smuggling as well as lead to increased revenue generation.
Mr Dzadzra said the Ministry of Finance was working to avoid increasing taxes by blocking loopholes that allowed people to evade tax, adding that tax exemptions that applied to some category of workers, including teachers, nurses, doctors and staff of the country’s missions abroad when they bought vehicles, had been repealed, to ensure that they all paid the appropriate taxes for increased revenue.
He said the implementation of the National Fiscal Stabilization Levy imposed this year would end in June instead of December 2014, while the Special Import Levy would now end in December instead of June 2014.
Nii Ayi Aryeetey, Deputy Commissioner in-charge of Policy and Programmes, Domestic Tax Revenue Division of GRA, said the GRA and banks in the country had discussed which services the VAT on non-core financial services should apply to, and allayed the fears of bank customers that the law would put them at a disadvantaged position.
Nii Aryeetey mentioned that the law would not affect interest charges on loans contracted by bank customers.
Representatives of most of the financial institutions in the Northern Region that attended the meeting said they were not content with how to implement the new VAT on non-core financial services.
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