NHIL is not subject to an input tax deduction – GRA Boss

Commissioner General of the Ghana Revenue Authority (GRA), Emmanuel Kofi Nti, has indicated that the National Health Insurance Levy (NHIL) is not dependent on input tax deductions.

Speaking to the media at a press conference Thursday morning, Mr Nti clarified that goods which the Value Added Tax (VAT) flat rate is imposed on are exempted from the levy adding that “this is because the 3% VAT flat rate has already taken care of the GETFL and NHIL.”

According to him, the National Health Insurance (Amendment) Act, 2018 (Act 971) has delinked the levy from VAT.

“Act 971 has amended section 47 of the National Health Insurance Act, 2012 (Act 852) by converting the National Health Insurance Levy (NHIL) into a levy which is not subject to the input-output method of computation,” he explained.

The rate for the NHIL, Mr Nti said is 2.5 per cent.

Mr Nti further indicated that the Ghana Education Trust Levy imposes a levy of the “supply of goods or services in the country other than exempt goods and services and import of goods or service other than exempt imports.”

According to him, the levy which is also 2.5 per cent is calculated on the value of the taxable supply of goods and services or on the value of the import of goods and services.

This, he said, shall be paid at the time the goods and services are supplied or imported.

“Just as in the case of the National Health Insurance (Amendment) Act, goods subject to the VAT flat rate scheme are exempt from the levy on the supply of goods,” he reiterated.

Mr Nti noted that the Ghana Education Trust Fund (Amendment) Act, 2018 (Act 972) has converted the VAT component allocated to the Ghana Educational Trust into a Levy which is not subject to the input-output method of computation.

Background

The Finance Minister, Ken Ofori-Atta during the presentation of the mid-year budget review stated that government has converted the National Health Insurance Levy (NHIL) of 2.5 per cent to a straight levy of 2.5 per cent; conversion of the GETFund VAT rate of 2.5 per cent to a straight levy of 2.5 per cent and the review of personal income tax to include an additional band of GH¢10,000 and above per month at a rate of 35 per cent.

The Minister indicated that there is an imposition of luxury vehicle tax on vehicles with engine capacity of 3.0 litres and above and the intensification of tax compliance measures.

With revenue underperforming in the first five months of the year, the government narrowly missed its deficit target of 2.4 per cent, recording a budget deficit of 2.6 per cent, which has prompted the need for additional measures to ensure it stays on course with the year-end target.

Mr Ofori-Atta told the Members of Parliament that: “As part of efforts to improve revenue performance, we will intensify tax compliance and plug existing revenue leakages.

“Investigations we have undertaken show in-bound leakages on goods arriving in the country, significant outstanding tax debts, suspense regimes in the area of warehousing, transit trade and free zones and tax audit issues such as limited coverage, low auditor productivity and low audit yields,” he stated.

He further disclosed that government was rolling out major initiatives to address those tax compliance issues, including the prosecution of tax evaders and corrupt tax officials, a special VAT task force to ensure enforcement and deepen VAT penetration from the current low levels of 11 per cent and institutional reforms at the Ghana Revenue Authority (GRA).