VAT Senior Staff caution against VAT flat rate

Accra, Aug. 9, GNA - The Value Added Tax Service Senior Staff Association (VATSSSA) on Wednesday called for caution in the implementation of the flat rate VAT scheme to be introduced later this year aimed to force unregistered businesses to register and pay tax. The document to enforce the three per cent flat rate scheme is currently before the Revenue Agencies Governing Board and would require the VAT Service to register businesses with yearly turnover of a minimum of 200 million cedis and a maximum of 1.2 billion cedis when it becomes operational.

But speaking at the opening session of the VATSSSA delegates' congress in Accra on Wednesday, Mr Samuel Gyakye-Smith; President of the Association, said there was the need for the authorities to exercise caution to ensure that the experiment was not abused to devalue the key objectives for introducing VAT.

He said apart from revenue generation, VAT held other incentives for countries, key among which was the improvement of record keeping culture in especially small and medium size enterprises to improve businesses and stimulate growth.

Besides, VAT also removes investment biases that had resulted in a dismal performance of the manufacturing sector.

Mr Gyakye-Smith said while the Service was attempting to facilitate the compliance of small-scale enterprises, it must keep in mind the complementary objectives for introducing VAT.

He therefore called on the Ministry of Finance to limit the flat rate scheme to small-scale enterprises of limited turnover band so as not to discourage investments into other sectors notably manufacturing. There is also the need to forge appropriate linkages with the Registrar-General Department for appropriate information gathering and sharing to make it impractical for business to proffer to the banks different statements from those to the tax authorities. Mr Gyakye-Smith said the Association had chosen the theme: "Voluntary Tax Compliance - A Shared Responsibility" for the conference in order to draw attention of stakeholders to the need for collaboration.

He said the Service had witnessed a decline in voluntary compliance, which in the past had accounted for over 90 per cent of VAT revenue.

In response to the threat, Mr Gyakye-Smith said the Service had stepped up its enforcement activities to combat this growing non-compliance.

These enforcement actions resulted in the recovery of 1.0 billion cedis out of a debt stock of 1.1 billion cedis. However, he said, it was not in the interest of taxmen to go to such length to collect the tax due to the State as such actions eroded the confidence of the public in the business. He called for mounting education and cooperation from the business community to enhance voluntary tax compliance. Deputy Finance Minister, Dr George Gyan-Baffour said recent changes in the revenue institutions were aimed at revamping and re-directing their focus with the injection of new dynamism towards achieving the objective of meeting the country's development goals out of the revenue generated.

Mr Anthony Ewereko Minlah, VAT Commissioner, appealed to the staff to join in the crusade to revamp the dwindling fortunes of the Service. 09 Aug. 06