Minority Threatens To Head To Court Over 3% VAT Flat Rate

The Minority has threatened to go to court in a bid to compel the Ghana Revenue Authority (GRA) to halt the implementation of the 3 percent VAT flat rate scheme.

According to the Minority, the scheme was not consistent with existing laws governing Value Added Taxes and as such, its implementation was illegal and should be halted.

The GRA commenced the implementation of the new flat rate scheme on July 1st, 2017.

Until now the scheme had been restricted to some categories of businesses in the retail sector but this new system means it has now has been extended to cover manufacturers and importers.

Some business associations had earlier met with the Vice President, Dr. Mahamudu Bawumia in a bid to get the policy scrapped, a move which proved unsuccessful

Speaking to the media on Thursday, the Minority Spokesperson on Finance, Cassiel Ato Forson said that the Scheme violates the VAT ACT 870 and could not be implemented.

“Any policy that seeks to impose a tax or that seeks to prevent the wholesalers, importers to deduct their import tax is illegal. Therefore we are urging the GRA and the Ministry of Fiance to stop perpetuating the illegality. It’s illegal and has no place in the law. It is not in sync with the spirit of Act 870, it’s Value Added Tax and you cannot in any way implement a tax that is not in sync with the reason why the VAT Act 870 was implemented.” he said.

“We wish to serve notice to GRA to immediately halt this illegality. Failure to do so will mean that we’ll go to court to compel them to stop this illegality.”

According to Ato Forson, who is also a former deputy Finance Minister, the Government, through the GRA and Minister of Finance were attempting to trick Ghanaians into thinking taxes were being scrapped, while introducing a new one “through the backdoor.”

“What they [GRA] are only seeking to do is impose a VAT through the backdoor. They are tricking Ghanaians that they are going to reduce taxes but apparently they are imposing taxes because they are preventing the importer from detaching input tax from the output tax. In the VAT Act 870, who constitutes an importer is straightforward, the law is clear on that,” he added.

“All of a sudden we have seen that the Ministry of Finance and GRA have decided to define a wholesaler to include an importer. There’s nowhere in this law that defines wholesalers to include importers. The importer is a standalone and import VAT is deducted as if it’s an import levy and it should be respected as such according to the law.”

Speaking to Citi News after meeting the Finance Committee in Parliament, Finance Minister, Ken Ofori Atta dismissed the Minority’s claims that the implementation of the policy might be contrary to the law.

“We don’t think there’s any illegality. We will look at it again but we’re sure we are operating within the law.”

He also pledged that government would work with stakeholders in the economy for a clearer understanding on how the VAT Flat Rate Scheme.

According to Mr. Ofori Atta, the rationale behind the policy is geared towards simplifying the tax system and does not impose double or cascading tax.

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(Via: CitiFM Online Ghana)