General News of Wednesday, 19 July 2017
A former Presidential staffer, Dr. Clement Apaak has dragged the Ghana Revenue Service to court over the implementation of the 3 percent VAT Flat Rate Scheme (VFRS).
According to Dr. Apaak the scheme has no justifiable legal basis in the 2017 VAT Act passed by Parliament earlier this year.
This comes on the back of agitations by the business community who claimed that the VAT is adversely affecting their revenue.
The Ghana Revenue Authority (GRA) on July 1, 2017 commenced the implementation of the 3% VAT Flat Rate Scheme; a policy which hitherto was restricted to some categories of businesses in the retail sector and also extended it to cover manufacturers and importers.
Analysts in the financial sector have observed that the introduction of the VAT has led to about twenty percent rise in the prices of goods.
Some business associations had earlier met with the Vice President, Dr. Mahamudu Bawumia in a bid to get the policy scrapped, a move which proved unsuccessful.
Dr. Apaak in his writ argued that the “purported act of subjecting importers to both the VFRS and the standard rate is unlawful as there is no justifiable legal basis for it in the 2017 VAT Act.”
“Plaintiff [Dr. Apaak] further avers that since the defendant seeks to impose both the VFRS and the standard rate of VAT on importers of taxable goods, the defendant cannot at the same time disqualify such importers from deducting their input tax, a right available to all other persons subject to the payment of the standard rate VAT. Plaintiff avers that importers subject to the payment of the standard rate of VAT are similarly situated with all other persons subject to the said standard rate and cannot therefore be accorded dissimilar treatment in respect in respect of the deduction of the input tax,” he stated in the writ.
The former presidential staffer is however praying the Accra High Court to declare as “unlawful” the extension of the VAT to cover importers of taxable goods.
He also wants an order from the court “for the refund of all input VAT paid or, in the case of VAT that is payable, a set-off against VAT to be paid under and by virtue of the VFRS.”
“A declaration that by subjecting the importers to bot the VFRS and the standard rate of VAT whilst at the same time barring the said importers from deducting input VAT, the defendant has discriminated against the said importers in contravention of Article 17 of the constitution. A declaration that all persons currently under the VFRS who paid VAT at the standard rate prior to the coming into force of the 2017 VAT Act have accrued rights to deduct input VAT paid prior to the coming into force of the said Act,” Dr. Apaak added in his writ.