Adnan Adams Mohammed
Government has effectively increased the Value Added Tax (VAT) by a 2.5 percent, bringing it to a total of 21.9%.
This will be a big blow to Retailers and Wholesalers whose annual sales (turnover) exceeds GHC500,000. As Retailers and Wholesalers within this threshold are mandated to add an effective rate of 21.9% to all their Vatable products.
However, all Retailers and Wholesalers whose annual sales fall between GHC200,000 and GHC500,000 are mandated to apply a VAT Flat rate of 4% to all taxable supplies. For the purpose of this analysis, Large Suppliers are Firms with annual sales above GHC500,000 whereas Small Suppliers are Firms with annual sales between GHC200,000 and GHC500,000. The Finance Minister, Ken Ofori-Atta, made this annoucement in parliament during the budget presentation despite the earlier caution by the minority and other stakeholders of the local economy.
“The government’s insensitiveness is too high,” Mr Thomas Ampem Nyarko, a member of the finance committee of parliament, served notice while speaking about the minority’s expectation on the budget early last week.
He called on the government to cut down on its “frivolous” expenditure.
Before the budget was presented, the minority caucus in parliament said it will not accept any 2.5 per cent increase in Value Added Tax (VAT) as purported to be contained in the budget statement to be presented by the Finance Minister.
Meanwhile, the President of the Ghana Union of Traders Association (GUTA), Dr Joseph Obeng, has warned that the association would lead traders across the country to reject any new taxes contained in the budget statement.
According to him, businesses are overburdened with taxes.
He reminded the government of the need to expand the tax net, work on the abuse of the warehousing system, and take a second look at free zone operations.
