Address confusion on three per cent VAT Flat Rate Scheme – Minority Leader

Business News of Monday, 10 July 2017

Source: Graphic.com.gh

2017-07-10

Haruna IddrissudddMinority Leader, Haruna Iddrisu

The Minority Leader, Mr Haruna Iddrisu, has requested the Minister of Finance, Mr Ken Ofori-Atta, to address the confusion regarding the implementation of the three per cent Value Added Tax Flat Rate Scheme (VFRS).

He said there had been confusion in the minds of the business community since June 2017, as to whether the VFRS was three per cent or 17.5 per cent.

Besides, he said, there was also a difficulty in businesses understanding what they were to pay against what was defined as a threshold.

“But ultimately, the government must not take such decisions which do not allow for predictability. Businesses must know what to pay and how much to pay,” he said.

Mr Iddrisu first raised the issue on the floor of Parliament last Friday and later granted an interview to the Daily Graphic on the matter.

He said he had received a copy of a petition from key business associations, comprising the Association of Ghana Industries (AGI), Importers and Exporters Association and the Food and Beverages Association of Ghana, to the Finance Committee of Parliament, asking for a review of the implementation of the three per cent VFRS.

A copy of the petition sighted by the Daily Graphic reads: “After thoroughly deliberating on the scheme, we believe the implementation of this scheme in its present form will significantly constrain businesses and increase cost of living, thereby bringing economic hardship to the ordinary citizen, hence our petition to your high office that you intervene for further engagement and fine-tuning before implementation.”

Background

In April, this year, Mr Ofori-Atta introduced the Value Added Tax (Amendment) Bill, 2017 in Parliament, and Parliament subsequently passed it into law to allow for the implementation of three per cent VFRS by importers, wholesalers and retailers.

The Domestic Tax Revenue Division of the Ghana Revenue Authority (GRA) ran an advert informing wholesalers and retailers that the implementation of the VFRS which should have started on June 1, 2017, had been postponed to July 1, 2017.

And on June 8, 2017, Mr Iddrisu moved a motion for the House to call on the Minister of Finance to implement the VFRS and suspend the advert.

Subsequently, the First Deputy Speaker, Mr Joseph Osei-Wusu, directed the leadership of Parliament and the leadership of the Finance Committee to engage the GRA and guide them on the import of suspending the implementation of the law and the step they could take to implement it.

Implementation difficulty

Mr Iddrisu said the country had implemented the three per cent VFRS before, and indicated that the implementation difficulty forced the government to discard it.

“We have been at three per cent before. It was the difficulty that forced us to migrate away from it even though government policy generally was to reduce taxes,” he said.

Mr Iddrisu said the Minority in Parliament did not have difficulty with the reduction. “What we are saying is respect the law. The law says three per cent. Let it be three per cent.”

“You cannot issue an advertiser’s announcement or a practice directive saying that we are postponing the implementation of a tax by a mere fiat of an advert. That will be in contempt of Parliament and disrespect to the laws of Ghana,” he said.

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