The Ghana Revenue Authority (GRA) continues its sensitization and education of Ghanaians and businesses on the new VAT system, notifying all businesses, both service and goods providers, to register under the new VAT system.
GRA has informed all businesses to be registered as a requirement to move from the VAT Flat Rate Scheme to the more unified and transparent VAT structure. He clarified that the threshold requirement registration of businesses when their turnovers exceed GHȼ 750,000 is a specific registration, but all businesses are required to register under the new VAT system.
“While service providers are exempt from the threshold requirement, they are still legally required to register under the new VAT system.”
Dr. Dominic Naab, Acting Head of the GRA’s Strategy and Research Department
GHȼ 750,000 Threshold Applies to Goods Suppliers Only
According to GRA, service providers are excluded from the GHȼ 750,000 threshold announced under the new Value Added Tax (VAT) system, covering only goods suppliers.
GRA reiterated that making compliance measures simple promotes efficiency of businesses in various sectors of the economy, which is the purpose of the new VAT framework.
“It is important for us to indicate that the GHȼ 750,000 threshold is only applicable to the supply of goods. For the supply of services, there is no threshold.
“So, if you provide services, the threshold does not matter. What this means is that, by law, the Commissioner-General is required to ensure that every person who provides services is registered.”
Dr. Dominic Naab
GRA Assures Gradual Transition of Businesses to New VAT System
Since the new reform is an Act, it is enforceable by law, implying that all businesses that default can be dealt with legally. The GRA, therefore, calls on all to comply with the reforms – compliance has been made easier now.
GRA assures businesses that the transition from the VAT flat rate system to the standard system is in process: the Act makes the VAT flat rate system obsolete. All businesses categorized under the new VAT registration threshold but still await formal deregistration to be excluded from VAT charges, are to proceed as before in payment of the VAT rate until they are deregistered. However, they are to pay the new VAT of 20 percent.
“With the advent of this new Act, businesses can no longer charge the VAT flat rate. If the Commissioner-General has not deregistered you from the system, then you remain a VAT-registered person.
“In that case, you should continue charging VAT at the standard rate until you receive official communication from the Commissioner-General either to deregister you or to confirm your continued registration.”
Dr. Dominic Naab
Ghanaians Encouraged to Keep Up with Changes
GRA encourages businesses and all Ghanaians to keep up with the changes under the new VAT reforms. The Authority maintains that the reforms are part of broader efforts to enhance revenue mobilization while ensuring fairness and clarity within the tax system.
GRA again gave VAT reforms highlights to aid Ghanaians in the process. The COVID-19 levy has been repealed, threshold for VAT has been pushed up from GHȼ 200,000 to GHȼ 750,000. And the VAT flat rate was removed, from 3 percent to a unified tax system.
The new VAT component on receipt includes Standard VAT of 15 percent, NHIL of 2.5 percent, and GETFund Levy of 2.5 percent. This totals 20 percent and will be clearly stated on the receipt for transparency, GRA explained.
According to GRA, prices of VAT-able goods and services have dropped by 1.92 percent. VAT-registered businesses can now claim input tax on NHIL and GETFund Levy, improving cash flow.
Furthermore, reconnaissance and prospecting activities in mining no longer attract VAT. To support the local textiles industry, there is zero-rated VAT on locally produced textiles extended until 2028.
In terms of digital VAT solutions, GRA has developed new digital tools to improve VAT administration and capture tax on cross-border digital transactions.
Additionally, GRA has rolled out Fiscal Electronic Devices (FEDs) to support VAT-registered businesses and strengthen compliance. The Authority has also created some VAT reward schemes for compliant businesses, to encourage the public to collect VAT receipts and businesses to issue VAT invoices.
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