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Wednesday, July 6, 2022

Reconsider migration of traders to standard VAT rate

Accra, April 12, GNA – The Ghana Union of Traders’ Association (GUTA) has appealed to the Government to address the challenges in the Value Added Tax (VAT) Flat Rate Scheme (VFRS) before migrating traders onto the Standard Rate Scheme (SRS).

The Association noted that though the trading in the market was done under the same condition and environment and around the same customers, three different payment systems existed.

They are those who operate under VFRS, SRS, and those who are not qualified to register and charge VAT.

That situation, Dr Joseph Obeng, President of the Association said brought about disparity among the competing traders: “Thereby, urging most traders out of business.”

He said this in a statement copied to the Ghana News Agency, noting that such a major tax policy should be uniformed and not discriminatory.

“It is also important for policymakers to understand that taxes should not be designed in a manner that poses difficulty for operators, thereby, destroying their businesses. It should rather be simplified to make compliance easier and raise compliance level higher,” he stated.

The Association indicated that: “In view of this, we find it very necessary to call the attention of the government to the fact that the trading community, especially our members will not be able to migrate to the Standard Rate Scheme.”

It also called the attention of the Government to resolve the issue of non-availability of VAT input, non-registration and issuance of VAT invoices and surcharge for the lack of VAT input.

“In this case, the VAT scheme should be; either a flat rate for all traders to operate or a uniform standard rate that ensures fairness and equity or is made optional for traders to choose any of the two,” GUTA urged.

The Association said it was hopeful that the Government would come to terms with the situation and concerns raised and will: “Carefully and seriously consider all the stated facts and act accordingly.”

The VFRS was introduced in 2017 as a special method of collecting and accounting for VAT/National Health Insurance Levy (NHIL) for all VAT-registered retailers of taxable goods with an annual turnover of more than GHS200,000, and not exceeding GHS500,000.

These registered taxpayers were charged VAT/NHIL and COVID-19 Health Recovery Levy (HRL) at a marginal rate of four per cent on the value of their taxable sales.

The tax was introduced to make accounting for the tax easier for small businesses, which were predominantly in the retail, wholesale and distribution chains.

In line with the tax policy proposals in the 2022 Budget Statement, the Parliament of Ghana passed the Value Added Tax (Amendment) Act, 2021 (Act 1072) to bring the SRS into effect. 

GNA

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