Business News of 2014-05-28

GCB prepares to charge VAT on non-core financial services

GCB Bank Limited is preparing its systems in anticipation of the implementation of Value Added Tax (VAT)?charges on non-core financial services.

The Managing Director of GCB Bank Limited, Mr Simon Dornoo, said the charges would take effect from next month, and explained that the early preparation was to ensure that the bank was not overtaken by events when the time for implementation was finally due.

According to him, the bank handles large volumes of business, adding that for now the bank is awaiting the final list of services that will attract the charge from the Ghana Revenue Authority (GRA) to comply with accordingly.

The imposition of the VAT?on what the government describes as non-core financial services has raised a lot of eyebrows from the general public, forcing the government to postpone the implementation date.

“For us we work from a default position because it is a matter of automation; we automate, so if you tell us its only four out of 10 then we only do four out of 10. From a technology point of view, we just make sure that we are able to assume responsibility,” he told the GRAPHIC BUSINESS on May 20, 2014 after a training programme on business/ financial analysis and reporting in Accra for financial journalists.

The government introduced a 17.5 per cent VAT levy on some financial services rendered by commercial banks in a bid to boost revenue and keep its fiscal-stabilisation plans on track.

The levy is also part of the expansion of the scope of taxes under the VAT Amendment Law, which raised tax rates.

Benefit of tax levy to banks

Mr Dornoo said the banks were only agents of the government and so would be collecting on its behalf.

He said VAT?was a consumption tax and, therefore, it was the end user of the service who paid.

“You realise that it is more at the corporate level and so the general public will not be so much affected,” he said.

The training programme

Some selected journalists participated in the training which was sponsored by the GCB Bank Limited as part of its social responsibility programme to improve the skills of journalists in financial, economic and business issues.

Given that there is so much discussion about the national economy in recent times, Mr Dornoo said GCB’s financial reporters’ forum was timely, especially when the financial sector was experiencing rapid growth and new trends were emerging.

The banking sector, he said, was becoming sophisticated, as banks introduced new risk management products to help their customers’ hedge against risks they might be exposed to.