Business News of Tuesday, 22 April 2014
The Ministry of Finance has debunked media reports suggesting that commercial banks are supposed to charge Value Added Tax (VAT) on salaries and savings accounts.
“We wish to state categorically that salaries, savings, deposits, loans and payment with cheques are all exempted from VAT,” Cassiel Ato Forson, Deputy Minister of Finance said in a press release. BELOW IS THE STATEMENT
1. The Ministry of Finance and the Ghana Revenue Authority have noted with concern publications in the media on banks charging VAT on services including salaries and savings.
2. We wish to state categorically that salaries, savings, deposits, loans and payment with cheques are all exempted from VAT. The new VAT Act, Act 870 only affects fees that are charged on non-core financial services such as data processing, legal, accounting, actuarial, notary and consulting services.
3. We also wish to state that this is not a new law, it has been in place since 1998. Banks were charging fees on services they were rendering. Banks are also already paying the VAT on inputs used to render these services.
4. Act 870 requires the Banks to register for VAT and they can offset the VAT against the VAT they charge. Therefore, the impact of the VAT is not the full 17.5 per cent as being speculated. VAT registered businesses/persons can also offset the VAT (input VAT) they pay to the banks against their VAT (output VAT).
5. The general public is also informed that this enforcement of the tax obligation should have started from January 2nd 2014, but the banks were allowed till May to enable them to fully prepare to implement the new policy.
Hon. Cassiel Ato Forson (MP)
Deputy Minister (F)