17.5% VAT on financial services reintroduced

Business News of Wednesday, 7 January 2015

Source: Citifmonline.com

VAT Office

Citi Business News can confirm that all 28 universal banks in Ghana have commenced charging the 17.5% Value Added Tax (VAT) on some financial services effective January 5th,2014.

The Minister of Finance Seth Terkper announced in the 2015 budget that government will implement the remaining VAT measures for fee based financial services this year.

The Ghana Revenue Authority suspended the implementation of the tax last year after government came under intense pressure from various quarters including banking institutions and some unionized worker groups.

According to a statement from GRA the decision was taken following a stakeholder consultation to allow more public education.

Speaking to Citi Business News a tax analyst Ali Abdallah Nakyeah demanded that banks clarify whether their earlier concerns have been addressed before the implementation of the tax.

“As to whether they have resolved all the issues, it is only the banks that can tell us”, he stressed.

He is also calling on the Ghana Revenue Authority to clarify which financial service would specifically attract the charges.

Meanwhile banking analyst Nana Otuo Acheampong who has kicked against the move believes government must rather tax directly the income of the financial companies instead of the bank customers.

“If you say you are charging VAT, the VAT is not on the supplier and the financial services companies are only supplying services and so you are taxing the consumer of those services and that is where the logic has gone wrong” , he added.