Palace, China Malls swerve GRA in e-VAT compliance swoop

All branches of the Palace and China Malls in Accra have shut down operations after they got a hint that the Ghana Revenue Authority (GRA) was on the way to close down their businesses for flouting the electronic VAT directive. A media team led by officials of the GRA which had already planned to carry out the action across all branches of these foreign-owned retailers on Tuesday, October 11, 2022 were left in shock upon their arrival – when they observed the shopping malls were already locked by their respective management. For the China Malls, information gathered by the GRA and journalists revealed their branches were closed on Monday, whereas the Palace Mall’s branches were closed yesterday – sparking suspicions of a possible tip-off from insiders at the GRA. Despite the actions of these malls’ management, the GRA applied its seal on their locks; making it unlawful and punishable to reopen the shops unless the tax authority does so. Background of the exercise The GRA from Saturday 1st October 2022 started using a certified invoicing system for the administration of Value Added Tax (VAT) in Ghana. This forms part of efforts to increase tax compliance and generate more revenue for the state. A Certified Invoicing System is an electronic invoicing system (E-VAT) certified by the Commissioner-General per the VAT Act 870 as amended. Speaking at a briefing ceremony before the exercise, Kwesi Eghan, Deputy Commissioner, Operations-DTRD, said the malls are part of some 50 selected tax paying companies that are supposed to be enrolled on the system. He said, so far, about 25 of these companies are complying but the rest are yet to register onto the system. The deadline for registration is dependent on the phased implementation which started on 1st October 2022. He said all newly-registered taxpayers will henceforth be on-boarded to the E-VAT System. The exercise will be done in a phased process that covers 600 large taxpayers in the first phase. The 600 firms being targetted under the phase include listed companies, and they altogether generate more than 90 percent of VAT revenue and 80 percent of domestic revenue. The e-invoicing exercise is expected to cover medium-sized taxpayers by 2023 before being extended to all businesses in 2024. Unlike the manual system, the e-invoicing system allows the GRA to monitor live transactions in companies where it has been deployed; thereby making it impossible for taxpayers to either under-invoice or dodge the payment of VAT. GRA estimates show that the country’s VAT contributions to tax revenue could be increased significantly from the current 17 percent if the various abuses that the manual invoicing system is prone to are decisively dealt with. “We want to improve compliance. We are more interested in collaboration than chaining businesses to pay their taxes. But we have no option at this moment than to move swiftly to ensure the right thing is done,” he said.

All branches of the Palace and China Malls in Accra have shut down operations after they got a hint that the Ghana Revenue Authority (GRA) was on the way to close down their businesses for flouting the electronic VAT directive. A media team led by officials of the GRA which had already planned to carry out the action across all branches of these foreign-owned retailers on Tuesday, October 11, 2022 were left in shock upon their arrival – when they observed the shopping malls were already locked by their respective management. For the China Malls, information gathered by the GRA and journalists revealed their branches were closed on Monday, whereas the Palace Mall’s branches were closed yesterday – sparking suspicions of a possible tip-off from insiders at the GRA. Despite the actions of these malls’ management, the GRA applied its seal on their locks; making it unlawful and punishable to reopen the shops unless the tax authority does so. Background of the exercise The GRA from Saturday 1st October 2022 started using a certified invoicing system for the administration of Value Added Tax (VAT) in Ghana. This forms part of efforts to increase tax compliance and generate more revenue for the state. A Certified Invoicing System is an electronic invoicing system (E-VAT) certified by the Commissioner-General per the VAT Act 870 as amended. Speaking at a briefing ceremony before the exercise, Kwesi Eghan, Deputy Commissioner, Operations-DTRD, said the malls are part of some 50 selected tax paying companies that are supposed to be enrolled on the system. He said, so far, about 25 of these companies are complying but the rest are yet to register onto the system. The deadline for registration is dependent on the phased implementation which started on 1st October 2022. He said all newly-registered taxpayers will henceforth be on-boarded to the E-VAT System. The exercise will be done in a phased process that covers 600 large taxpayers in the first phase. The 600 firms being targetted under the phase include listed companies, and they altogether generate more than 90 percent of VAT revenue and 80 percent of domestic revenue. The e-invoicing exercise is expected to cover medium-sized taxpayers by 2023 before being extended to all businesses in 2024. Unlike the manual system, the e-invoicing system allows the GRA to monitor live transactions in companies where it has been deployed; thereby making it impossible for taxpayers to either under-invoice or dodge the payment of VAT. GRA estimates show that the country’s VAT contributions to tax revenue could be increased significantly from the current 17 percent if the various abuses that the manual invoicing system is prone to are decisively dealt with. “We want to improve compliance. We are more interested in collaboration than chaining businesses to pay their taxes. But we have no option at this moment than to move swiftly to ensure the right thing is done,” he said.