Business News of 2014-01-21

New VAT invoices not ready - GRA

Barely two weeks after the charging of the new two per cent Value Added Tax (VAT), businesses eligible to charge the tax are yet to receive their manual invoices from the Ghana Revenue Authority (GRA).
This demonstrates the lack of preparedness on the part of the authority to ensure that the collections are done with effect from the day on which it was meant to take effect.
It also means that the projected revenue meant to be channeled into the proposed infrastructure fund is likely to suffer some set back, no matter how marginal.
But the Commissioner-General of Ghana Revenue Authority, Mr George Blankson, has given the assurance in an interview with the Graphic Business that the manual invoice would be ready in a month or two.
Situation on the ground
Meanwhile, checks by the paper has revealed that there are some service providers and traders, in particular, who are yet to start charging the new two-and-a-half per cent VAT rate on customers, citing various reasons for their actions.
While some claim that the new charge is making their products and services more expensive and uncompetitive as compared to those who provide the same services or sell the same products but do not charge VAT at all, others are of the view that they have not been given any new receipts and can, therefore, not add the new rate by writing in ink.
A few more explained that they are now updating their system-generated invoices to be able to charge the new VAT rate that took effect from January 8 this year.
To them, this has come about because since the introduction of the new VAT rate, they are yet to receive their manual invoices from the Ghana Revenue Authority (GRA).
Market report
At Abossey Okai, the hub for the sale of second-hand vehicle parts, and Okaishie, a major trading centre in the central business district of Accra, it was observed that many shops which are supposed to charge the VAT in full were not doing so.
One brand new Toyota and Nissan spare parts dealer, who only mentioned his name as Kumi, said “I need not add that new rate because it is making my spare parts unattractive to customers and potential customers because my competitors are not charging.”
According to the President of the Ghana Union of Traders Association (GUTA), Mr George Kwaku Ofori, the new VAT rate would impact the prices of their products and services, and in the quest of traders to reduce the impact on their businesses, they would be compelled to use all manner of tactics to avoid it to stay in business.
“I am not surprised about what some traders and service providers have started doing already because it is very expensive to bring goods into the country, and not being able to sell because taxes have made them expensive is quite disastrous,” he said.
Mr Ofori agreed with the government in its quest to raise some more revenue for development, but noted that in situations where the businesses to generate that money collapse because of the tax burden, that objective would not be met.
Views from service providers
At one popular Chinese restaurant in Osu, the cashier claimed not have heard about the new rate, and was, therefore, as at Friday, January 10, 2014, issuing receipts based on the 15.5 per cent VAT charge.
Speaking to Graphic Business, the Sale’s Coordinator of Hyundai, Ms Abigail Otoo, said technicians were still working to update their systems.
She said the company had been receiving complaints from customers since the new VAT took effect.
That, she said, was as a result of the company’s continuous use of the old manual invoice which still had 15 per cent VAT rate on it. She was, however, hopeful that the new invoices would be in use very soon.
The Sales Executive for Stallions Motor GH, Mr Eldreidge Adjetey, also disclosed that although the new VAT rate had taken effect in their company, they would not strictly adhere to the increment due to their discount policy.
He said due to the competitive nature of the market, the new VAT rate would not necessarily affect the prices of their cars.
However, the Showroom Supervisor for Auto Parts Limited, Mr Charles K.T. Agbo, also in an interview with the Graphic Business, was rather of the reverse opinion. He indicated that the company was not encountering any problems due to the fact that the new VAT rate was communicated to the public last year, which, to him, created lots of awareness.
At the Movenpic Ambassador Hotel, the Account Payable, Mr Dugan Dzuby, said they had been given permission to make manual changes to the old VAT invoice till companies had access to the new one.
The Secretary to the financial controller for Novotel Hotels, Mrs Daphne, revealed that the hotel had started applying the new charges, and according to her, they had so far not encountered any difficulties from customers.
Tax, customs and corruption
One major reason why corruption continues to thrive at the entry points of the country is because of the high duties on imported goods.
Importers who are unable to pay for the duties find ways to bribe their way through the system with the connivance of some unscrupulous custom officials, causing the state to lose so much revenue.
According to Mr Ofori, business people would not sit idle while they watch their capital deplete because of lack of sales among others and so they would continue to beat the system at the expense of the state.
To him, the more the government finds ways to widen the tax net, while keeping tax rates at affordable levels on goods and services, business people will pay the right amounts to enable the state generate the right revenues.
Source: Graphic Business
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