Business News of Tuesday, 20 January 2015
Ghanaian businesses according to the Member of Parliament (MP) for the Akyem Abuakwa North Constituency, J. B. Danquah-Adu, are reportedly relocating to Cote D’Ivoire and other West African countries due to the unfavourable business conditions in Ghana.
Speaking on the Point Blank segment of Cifi FM’s Eyewitness News, the frustrated MP said citizens are “being suppressed under a cushion of several taxes and this particular one [17.5% VAT] will suffocate and kill us.”
In 2014, the Ghana Revenue Authority (GRA) suspended the implementation of the 17.5% VAT after severe backlash from some Ghanaians who were of the view that they were being overburdened with taxes.
But the 17.5% VAT was reintroduced in 2015 and so far, about 28 universal banks in Ghana have commenced charging the 17.5% VAT on some financial services.
Mr. Danquah-Adu urged the Minister of Finance to review the tax “otherwise we are going to see the wholesale movement of businesses going to the sub-region becoming very, very real.”
He observed that before importers can clear their goods from the port, they are made to go through over 24 transactions “…you pay so much fees and taxes…you have all the issues of the power outages and then you have the fluctuations of your currency and then on top of all of this, you have a VAT being loaded on your financial services.”
He stressed that Ghana does not have a friendly business environment, adding that “there are so many ways of raising revenue but this is not one of them…people are relocating to Cote D’Ivoire because the environment is attractive.”
The MP argued that businesses thrive on competition and if the government wants to create an enabling environment where businesses can thrive, compete, employ and pay their relevant taxes, “then you must do what is right.”
“Mobile money, telephone banking, cheque books are all being taxed. If this cannot be anti-business, then I don’t know what else it.”
But in reaction, Finance Minister Seth Terkper explained that citizens are not being charged the full impact of the 17.5% as it is being represented by the MP.
“We are not taxing all banking services. Your interest on savings is not going to be taxed, interest on whatever accounts you have are not going to be taxed. In other words, the core business service which is interest is not going to be tasked. It is only the non-core services which have been listed that are going to be taxed,” he said.
Mr. Tekper advised that people should not create the impression that “we are imposing taxes on all banking financial services.”
According to him, “it is erroneous to say that the full impact of the tax is going to be 17.5% that is why it is a value added tax. At any stage, it is a VAT on only the value that is being added at that point in time.”