Business News of 2014-01-14

New VAT rate won’t affect pharmaceutical companies - MP

Chairman of the Parliamentary Select Committee on Finance, James Klutse Avedzi has clarified that the inclusion of pharmaceutical companies in the new VAT rate is to create an even playing field.
The Pharmaceutical Manufacturers Association has raised concerns about the new Value Added Tax (VAT) rate of 17.5% saying they may be forced to push the increased cost onto consumers.
With the introduction of the new VAT rate, the prices of locally manufactured medicines are likely to be increased up to 17%.
But in an interview on Eyewitness News, Mr. Avedzi explained that a lot of discussions went into the decision to review the VAT law. According to him, a lot went into the decision to remove the zero VAT rating in the Pharmaceutical industry.
He pointed out that there was no even playing field in the industry because companies who imported raw materials to locally manufacture medicines operated under the zero VAT rating while companies which are into the importation of finished products were made to pay VAT.
According to him, this policy was aimed at making locally manufactured medicines “competitive in terms of quality and in terms of pricing” but this objective was not achieved hence the resolution to scrap the policy.
Mr. Avedzi stated that the system had been practiced for over 10 years, but it has yielded no benefit, therefore, the government is now “facing the reality” by making “the field level for both the importer of finished products and the importer of the raw material.”
In relation to the impact the new system will have on job creation, Mr. Avedzi maintained that “it will not have any negative impact on job creation.”
He revealed that the National Health Insurance Authority (NHIA) is also scheduled to “review its price taking into effect the introduction of this new system.”