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Business News of Friday, 2 February 2007

Source: GNA

VAT Service sensitive to the poor - Minlah

Accra, Feb. 2, GNA - Mr Anthony Minlah, Commissioner of the Value Added Tax (VAT) Service, on Friday said that the Service was sensitive to the plight of the poor hence exemption of taxes on education, health and agricultural equipment to make such services affordable. Mr Minlah was speaking at a day's workshop organized for the media and small and medium scale enterprises (SMEs) to educate them on the activities of the VAT Service and upcoming Flat Rate Scheme (FRS). The VAT Flat Rate Scheme is an accounting mechanism that applies a marginal tax percentage payable on the value of taxable goods supplied. Under the FRS, three per cent of tax would be charged by traders on their taxable supplies as an alternative to the invoice credit method of VAT accounting.

Mr Minlah explained that the FRS would be restricted to a specified sub-sector within the retail distribution defined by levels of turnover with the target being the informal trading sector.

He said traders with a threshold of less than 100 million a year would not be included in the FRS which had been designed to address identified compliance problems with retailers of goods. "All enterprises, irrespective of size, will have to meet the same threshold for registration; file returns with payments; are subjected to control and verification visits; apply the same VAT rate and suffer the same penalties for non-compliance with provisions of the VAT Act." He said the FRS was going to ensure compulsory registration of SMEs, creating a level playing field and would increase fairness and competitiveness in the tax system.

Mr Minlah said registration for VAT would improve businesses outlook of micro and small scale enterprises, adding that the requirement to issue invoices and keep basic records would compel SMEs to improve their record-keeping culture.

"Creating an enabling environment for SMEs to be part of the engine of growth depends on inflows through taxes and loans. It is in the absolute interest of the VAT Service to assist growth of businesses," he said.

He said ensuring compliance was an on going challenge, which required public education and strong client focus. He commended SMEs that paid their VAT voluntarily and while encouraged a high level of voluntary compliance.