The Ghana Revenue Authority (GRA) is set to start the first phase of electronic value added tax (e-VAT) implementation to rope in large taxpayers.
According to the Ghana Revenue Authority, the new e-VAT will have some 600 taxpayers in the Large Taxpayer Office (LTO) integrated into the commissioner-general’s invoicing system starting from 31st March, 2023 to 1st June this year.
The announcement follows the successful pilot of some 50 targeted taxpayers on the certified electronic invoicing system.
The GRA, meanwhile, explained that the targeted 600 large taxpayers pay 90 percent of total VAT revenue and a total of 80 percent of the country’s total domestic tax revenue.
The second phase of the initiative, Assistant Commissioner – VAT Administration, Philip Acquah, said will start immediately after the completion of the first part and end by the fourth quarter of 2023. In all, it will include some 1000 medium taxpayers. “The third phase of the implementation will include all other VAT registered taxpayers, and will be effective by the end of December 2024,” he disclosed.
Mr Acquah, who was speaking at a Quarterly Tax Dialogue Series hosted by the UK Ghana Chamber of Commerce (UKGCC) and PwC Ghana in Accra, explained that one of the key benefits of the e-VAT is to formalise the large informal sector and to detect misrepresentation of tax.
The virtual dialogue, themed ‘e-Vat and its Implications for Businesses’, saw participation from the business community and stakeholders of key institutions.
This year, the GRA has set a revenue target of GHC206 billion, out of which the Customs Division is expected to collect some GHC28.5 billion.
Importantly, the tax collector is seeking to leverage the e-VAT regime to improve tax collections as the authority currently rakes in some GHC23.4 billion from VAT, data from the Finance Ministry has shown.
The country’s VAT penetration and performance is regarded inadequate among countries in the sub-region – positioned at about 17 percent compared to Benin, which has a penetration of up to 40%; Côte d’ Ivoire, 32%; Niger, 29%; Senegal, 33%; Sierra Leone, 25%; and Togo 43%.
Meanwhile, a Tax Partner at PwC Ghana, Abeku Gyan-Quansah, indicated that a key to measure the success and impact of the e-VAT would be how the GRA is able to collect more than the GHC23.4 billion in 2023.
Tax Collection Comes At Great Cost
Head of Tax Policy Unit at the Ministry of Finance, Daniel Nuer, on his part, said tax collection comes at great cost, and as such, there is a need to utilise available strategies to block all loopholes. “This is one of the reasons for the introduction of the e-VAT, which seeks to tackle forgery of manual invoices, carding, among others,” he said.
Meanwhile the advent of the electronic VAT system will solve a lot of problems and prevent harassment of both taxpayers and collectors.
Just this week, Kennedy Agyapong, MP for Assin Central and a New Patriotic Party (NPP) flagbearer aspirant, on March 13, 2023, claimed he is being harassed by the Ghana Revenue Authority over VAT payments. A claim that the GRA has vehemently denied.
GRA explained that in the area of enforcement and compliance, GRA carries out invoice invigilation exercises to ascertain Value Added Tax (VAT) paid by VAT registered businesses. “These exercises entail stationing staff on the premises of VAT registered businesses such as shops, restaurants and manufacturing sites to check the issuance of VAT invoices,” it stated.
The e-VAT will therefore, eliminate all these issues coming out.
