Business News of 2014-08-23

‘Review VAT flat rate scheme’

The Chartered Institute of Taxation has called on the Ghana Revenue Authority (GRA) to review the VAT Flat Rate Scheme (VFRS) to enable the government to generate more revenue.

According to the institute, an assessment of the scheme by some financial experts had established that the government was losing huge sums of domestic revenue as a result of loopholes in the scheme.

In his welcome address at the opening ceremony of the 2014 conference of the institute, its president, Mr Mike Kofi Afful, explained that some service providers on the scheme who fell within the VFRS threshold of between GH¢100 million and GH¢1.2 billion were making higher turnovers and, therefore, that scheme needed to be reviewed.

The two-day conference, on the theme, ‘The relevance of taxation in middle income economies’, brought together officials and players in the taxation sector.

It provided the participants with a platform to deliberate on taxation regarding the interest of the taxpayer, the tax collector and the government.

Mr Afful advocated a system that would ensure that once a service provider’s annual turnover exceeded the VFRS threshold, the service provider was immediately taken off the scheme.

That, he said, would ensure that service providers paid the right percentage of VAT on their annual turnovers.

VAT Flat Rate Scheme (VFRS)

Under the VFRS, retailers with annual turnovers of between GH¢100 million and GH¢1.2 billion are expected to pay three per cent of their turnovers as Value Added Tax (VAT).

However, the standard aggregate VAT and NHIL rate on the taxable supply of goods and services is 17.5 per cent.

Mr Afful said the government and all stakeholders needed to ensure that tax collection was maximised because as a middle-income country tax was the major source of funds for national expenditure.

“The migration to a middle-income status leads to the reduction of external funds available to the government to supplement funds for national expenditure requirements,” he pointed out.

Ghana, he said, needed to find ways of widening the tax net to enhance internally generated funds, since they served as the major source of funding for the country’s expenditure.

Tax net

Mr Afful explained that widening the tax net did not necessarily mean increment in taxes or the introduction of new taxes.

He said what it meant basically was to make the payment of tax compliable and ensure 100 per cent collection.

The conference, he said, had resolved to assist the government to collect all taxes due it.

Source: graphic.com
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