The Ghana United Traders Association (GUTA) has petitioned the Finance Committee of Parliament, to maintain the 3% Value Added Tax (VAT) flat rate scheme, which came into effect on July 1.
The Ghana Revenue Authority (GRA) introduced the policy to replace the old VAT law which mandated manufacturers and service providers to charge 17.5% VAT on behalf of the state.
The Association of Ghana Industries (AGI) which says the new VAT flat rate has led to an increase in their operational costs, has petitioned the Finance committee for a possible review. It also wants more engagements with members on the new tax regime.
The petition, which was signed by GUTA President George Ofori also noted: “The claiming of VAT refunds after input VAT has been included in price build up is effectively dealt with under the new scheme”.
According to GUTA, its members who will be implementers of the VFRS, do not see how the policy will lead to price increases.
“To our understanding, this is just a matter of calculations and if done right will not in any way lead to changes in price as your committee is being led to believe. The system has been with us for over a decade and has never resulted in price increases,” the petition states.
GUTA therefore “support the VAT FLAT RATE SCHEME 100% and that it is a very good policy that will ensure fairness in the business environment”.
The Ghana Revenue Authority (GRA) explained that the previous 17.5% input-output tax was charged on value added while the new 3% rate is imposed on turnover.
The old system saw few people complying due to the extensive paperwork in filing VAT returns.
Meanwhile, the Finance Minister says there will be no suspension of the flat rate scheme despite the demand by some associations.
Mr. Ofori Attah told the media after meeting the Finance Committee, that there will be further engagements to clear up the misunderstanding.