Business News of 2014-04-30

Review of VAT on financial services underway – Ministry of Finance

Deputy Minister of Finance, Kweku Ricketts Hagan, has revealed the ministry is considering proposals by Parliament's Finance Committee on the need for a review of recent directive to charge Value Added Tax (VAT) on financial services.
The Finance Ministry had directed that all "non-core" financial services at banks in Ghana would attract a 17.5% VAT, beginning June this year.
But shortly after the directive, challenges with what constitutes "non-core" financial services cropped up.
Chairman of Parliament's Finance Committee, James Avedzi, indicated last week that there is a need for the new VAT Law to be reviewed in order to address ensuing controversies about the actual services that the 17.5% tax should cover.
Mr Avedzi subsequently directed the Ministry to come before Parliament's Finance Committee to clarify issues with the new law.
Also, renowned lawyer Ace Ankomah, has pointed out that the current interpretation of the new tax by the Finance Ministry is not accurate.
But Mr. Ricketts Hagan told Joy Business on Tuesday his outfit is currently working to ensure the challenges with interpretation of the law, especially, are put to rest.
Although the directive from the Finance Ministry indicated that the VAT should be charged on "non-core" financial services, top on the controversy list with regards to the 17.5% levy is the lack of a clear demarcation of what constitutes "core" and "non-core" banking business transactions.
"At the moment as a result of what transpired a few days ago with banks sending messages that were not clear to the public, we thought it wise to basically re-group again with the banks...to make sure we provide a good list of what is 'core' and what is 'non-core' banking service", said Mr Hagan.
The Finance Ministry's decision to review aspects of the VAT on financial services is likely to push ahead the June date for implementation at the various banks in the country.