ACCRA, Parliament on Friday passed the Value Added Tax (Amendment) Bill, 2017, which would require all taxable retailers and wholesalers to account for the Value Added Tax (VAT) at a flat rate of three per cent.
The rate would be calculated on the value of the taxable supply unless the Commissioner General of the Ghana Revenue Authority (GRA) directs otherwise.
The Bill, taken through a certificate of urgency, seeks to amend the Value Added Tax Act, 2013 (ACT 870) to classify the supply of financial services, domestic transportation of passengers by air and supply of immovable property by a real estate developer as exempt supplies.
According to the Finance Committee’s Report on the Bill, the bill is also to give legal backing to a VAT Flat Rate Scheme that would facilitate collection of VAT on the supply of goods in the distribution chain and to provide for related matters.
The Government, as part of the 2017 Budget Statement and Economic Policy, proposed to reduce or abolish some taxes in order to bring relief to consumers and to stimulate growth of certain sectors of the economy.
Pursuant to that objective, the Government introduced the Bill to amend the VAT Act, 2013 (Act 870) to reduce the cost of supplies of real estate and transportation by air in order to provide relief to consumers.
The Bill also aims at providing a simplified VAT scheme for retailers so as to improve their compliance levels.
The report said the Chief Director of the Ministry of Finance informed the Committee that the Bill would remove the VAT on the supply of financial services.
However, this removal would not affect VAT on professional services in the nature of accountancy, investment and legal advice. This is because the VAT on these professional services had always existed.
The three per cent VAT Flat Rate Scheme is, however, said to be revenue neutral as it is not expected to occasion any loss of revenue but rather bring about enhance efficiency, ease of compliance and convenience administration.
The Commissioner General of the GRA explained that the VAT Flat Rate Scheme of three per cent would be applicable only to wholesalers and retailers who failed within the VAT registrable threshold.
He said it would not rope in other traders who did not meet the VAT threshold which currently stood at GH200,000.00.
Source: NAM NEWS NETWORK