The Ghana Revenue Authority (GRA) has reiterated that the plan to charge VAT on financial services has been postponed until further notice and therefore urged the media to desist from misinforming the public on the proposed tax.
The GRA is particularly concerned about the misleading comments on the authority’s operational definition of “financial services”.
According to the Chief Revenue Officer of the GRA, Mr Francis Ocran, under Act 870, the term, “financial services” is defined as the provision of insurance; the issue, transfer, receipt of, or dealing with money (whether in domestic or foreign currency). It also refers to any note or order of payment of money; provision of credit; or operation of a bank account or an account of a similar institution.
Mr Ocran was speaking at a small and medium-scale enterprises (SME) business solutions clinic for operators in the SME sector, organised by Union Savings and Loans at its headquarters at Dzorwulu in Accra.
He advised business owners to get copies of the VAT Act 2013 (Act 870) as well as accurate information on issues concerning the proposed VAT//National Health Insurance Levy on financial services in the banking sector to guide them in their operations in the event of the introduction of the tax.
He also reminded the business community that enterprises whose turnovers did not meet the threshold for charging Value Added Tax (VAT) could still register and receive the tax on behalf of the authority.
The registration threshold under the VAT Act 2013 (Act 870) is the value of taxable supplies made by a person (or reasonably expected to be made) exceeding GH¢ 120,000 at the end of any period of 12 or less months (Section 6).
According Mr Ocran, owner(s) of enterprises that do not meet the registration threshold may apply voluntarily to be registered for the tax.
He said the pre-requisite for the registration of such companies included the existence of evidence of “proper accounting records on the business and fixed place of business or abode”.
Business transactions with government or state institutions must be covered by VAT receipts, he pointed out, but acknowledged that it was not all companies or individuals who did business with the government that had the capacity to generate revenues that met the threshold for charging VAT.
“That is why there is a special dispensation for such companies and persons to register to receive the tax on behalf of the GRA,” he explained.
Mr Ocran commended Union Savings for the initiative to hold periodic clinics to help educate small and medium scale business owners on issues that directly or indirectly affected their operations.
He said the decision to organise a special session on the Value Added Tax system was very laudable and pledged the commitment of the GRA to supporting the programme.
“Lack of understanding of the Value Added Tax system can make you price yourselves out of the market by double charging the tax and that is what you must avoid,” Mr Ocran told the participants.
The Managing Director of Union Savings and Loans, Mr Philip Oti Mensah, called for, “an exhaustive collaboration between the financial sector and the Ghana Revenue Authority in the implementation and public education on the proposed VAT/NHIL on financial services”.
He said the Union SME clinic was a good platform for sharing information and ideas on issues that affected the business and financial sectors and pledged Union’s commitment to the initiative.
According to Mr Oti Mensah, Union would continue to engage expert resource persons to run the clinics. “There will also be follow-ups to the clinics, where the staff of Union will have one-on-one sessions with business owners”.
