VAT, Customs Service fight over incentive

There is simmering tension between the VAT service and the Customs, Excise and Preventive (CEPS) over the latter’s collection of import VAT. This come in the wake of the announcement by government in this year’s budget on a decision to let revenue agencies keep three per cent of income collected by their organizations for the state.

According to a source at CEPS, although they have been in charge of the collection of the import VAT, the VAT Service has been clamouring for it to be added to their revenue collection ever since this year’s budget was read in Parliament. It said the call is very baffling since the tax is collected at source, at the ports and so wonders on what basis VAT wants the revenue to be transferred.

The source cautioned that if the wish of VAT is granted, the state stands in danger of losing billions of cedis worth of revenue as CEPS officers who are supposed to collect it would not go about their duties of assessing and collecting the tax with the same zeal and seriousness in the same way they did in the past.

It welcomed the decision of the government to let revenue collecting agencies retain three per cent of their collection, since it would serve as a motivating factor in the performance of their duties together with the equipment and resources it would provide.

Giving a background to the collection of the tax by CEPS, the source said it was charged with the duty of collecting it after the VAT Service and the Value Added Tax (VAT) were established and sales tax, which was then being collected by CEPS was abolished. It said in addition to their main work of collecting customs duty and preventing smuggled goods from entering or leaving the country, CEPS also acts as the first line of defence since it took over the duties of the erstwhile border guards in 1988.

The source stated that the workload given to CEPS is enormous whilst the work force of 3,000 is inadequate and therefore more revenue and resources need to be channelled into the service to recruit more staff and equip them appropriately. It called on the Minister of Finance to step in immediately and resolve the impasse if the government wishes to achieve its aim of maximising revenue generation in the country whilst protecting its territorial integrity.

However, when the VAT Service was contacted, the head of the Public Affairs Department, Mr Victor Ampah, said, “as far as we (VAT Service) are concerned there is no problem. The issue is being handled by the Revenue Agencies Board which is expected to come out soon with the modalities on how the 3 per cent retention should be allocated,” he added.