Business News of 2014-06-30

17.5% VAT on financial services postponed until further notice

The Ghana Revenue Authority (GRA) has for the second time postponed until further notice the implementation of the 17.5 per cent VAT on financial services. The implementation of VAT on some 32 fee-based financial services was supposed to take effect on Tuesday, July 1.
However, a statement signed by the Commissioner General of the GRA, Mr George Blankson said the deferment of the implementation of the VAT on financial services was taken in cognisance of the request by sections of the banking community for an extension of the period.
It said, “after a careful evaluation of progress of the ongoing publicity and education programme on VAT on financial services, and taking cognizance of the request by sections of the banking community for extension of the period of preparation for implementation of the tax, the commencement date of 1st July, 2014 originally set, has been postponed until further notice.”
According to the statement, the decision was taken in consultation with the appropriate stakeholders to allow for more education of the general public and adequate lead time for the banks to achieve the level of preparedness that will ensure a hitch-free implementation.
The 32 fee-based services that is expected to attract the 17.5 per cent tax include current account for corporate bodies, bank draft (payment order), stopped cheques, returned cheques and commission on turnover for corporate organisations.
Others include overdraft processing or renewal fee, revolving acceptance credit and arrangement fee for facilities and statements, closure of accounts and certificates of balance.
There are also charges on online banking (Internet) that include e-statements, e-clients, phone banking, SMS banking, mobile banking, monthly subscription and financial transaction Fees.
The list of fees, commissions and similar charges for financial services that are subject to the tax was developed by the Technical Committee for the Implementation of VAT Act 2013 (Act 870) which was made up of representatives of the Ghana Association of Bankers, the Ministry of Finance and the Ghana Revenue Authority and approved by the Minister of Finance, Seth Terkper.