Banks Now Charge VAT On All Transactions

If you did not know this, then take it from the Scandal newspaper now. The new Value Added Tax (VAT) law 2013, Act 870, makes it compulsory for all who use banking services to pay a 17.5 per cent Value Added Tax (VAT) on any transaction they carry out with any bank in Ghana.

The new law received Presidential assent on 30th December 2013 and received notification in the gazette on 31st December 2013 thus making all the provisions of the law effective from that day.

Under the heading “Scope and Coverage of The Value Added Tax,” the law extends the coverage of VAT to include “the supply of Financial Services that are rendered for a fee, commission or a similar charge.”

The Act defines Financial Services to mean “the provision of insurance; issue, transfer, receipt of or dealing with money whether in domestic or foreign currency or any note or order of payment of money, provision of credit or operation of a bank account or an account of a similar institution.”

What this means is that each time you draw a check, or make a physical withdrawal from your account over the counter, or receive money into your account, or transfer money form your account or even take a loan facility from your bank or conduct any business that attracts a fee or charge with a bank, you will be required to pay the 17.5 percent.

The law applies to all salaried workers who draw their salaries from the bank, all traders, taxi drivers who deposit their sales with their banks, all customers who pay for goods and services with checks and indeed anyone who goes to do any financial institution to conduct and such similar business.

Bankers are very tight-lipped over this new policy except to confirm that they have received a very long circular from the Bank of Ghana on the subject and detailing all the services that should attract the 17.5 percent VAT.

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