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Business News of Monday, 31 July 2017


3% VAT flat rate will not increase prices - GRA

The Ghana Revenue Authority (GRA) has clarified that the 3% VAT flat rate will not increase cost of goods imported into the country.
The GRA explained that the 3% VAT flat rate is not designed to increase cost as speculated by importers.

“The scenario that has been run for the 3% VAT flat rate should not increase taxes. It’s all about the costing of the product. What people are getting wrong is that the 3% is not to increase your margin. So when doing the costing and adding the input VA, which you should have claimed earlier under the standard rate, you shouldn’t add that one to your original cost and claim margin on the input tax, Deputy Commissioner in charge of the Large Tax Payer office at the GRA', Edward Gyamerah explained.

“If you do that then you are likely to get the bloated cost and that is where you are likely to have an increase in cost as we rightfully said with the implementation over the last four weeks,” he added.

Some business associations who are not satisfied with the implementation of the scheme have threatened to pass on cost to consumers should government continue to charge the rate at the ports.

They argue that the tax creates a situation of inconvenience to their businesses.

Some manufacturers have warned of a possible job cuts if the scheme is continued
But Mr. Gyamerah assured that the system will not permit cost of goods to be inflated.

“We haven’t seen any significant increase in prices as is been perceived so the question we have to ask is why is it that a small group of people are fighting for the rate to be abolished.”

“I think we need to query this to find out why rather than think this is increasing taxes. I think the demonstration is very clear and people should be calm to know that government has no intention of increasing prices with the introduction of the VAT flat rate scheme.” he added.

Tax identification number

Meanwhile Mr. Gyamerah has reiterated that Ghanaians who fail to acquire a Tax Identification Number (TIN) within the shortest possible time will be denied access to passports, driver’s license, visa applications and many other important documents.

“Currently if you don’t have a Tax Identification Number you won’t be able to clear your goods from any port or factory, so if somebody sends you goods and you want to clear them at the port and you have everything except your TIN, you will not be able to clear the goods and that is one of the reasons everyone will need to have a TIN.”

He added that “if you want to register your land you will need to show your TIN. Again if you are going for tax clearance certificate from the Ghana Revenue Authority you will need to be able to obtain the TIN to commence business or to register your business with the Register Generals Department.