Business News of 2014-05-30

VAT on financial services unlikely to start in June

The VAT on financial services scheduled to take effect from next month is not likely to materialize.

The 17.5 percent tax was to be implemented in June beginning with commercial banks before it would be extended to other financial service providers like Insurance and Microfinance Companies over time.

But the UBA’s Managing Director, Abiola Bawuah has disclosed to Joy Business, this has been suspended indefinitely following a meeting with the Association of Bankers.

“Government needs to increase its income base to be able to expand infrastructure. However we've all been advised to hold on until further notice. That is what we are told by the Association of Bankers.

"Maybe government is still looking at the various parameters. So maybe we should look at July because we would still have to meet and agree on some of those parameters. Like I said let's just wait and see.

It's however not going to cut across every financial service. It's not on your withdrawal and deposits. It's only on certain services. So it may not even affect everybody,” she noted.

Both the Insurance and Microfinance industry players have made a case to be completely exempted from the tax.

A special committee working to establish the specific financial services to be affected by the tax is yet to come out with its report.