PricewaterhouseCoopers (PwC) has stated that it supports the digitalization of the country’s tax processes since that may improve tax compliance and increase Government revenues.

However, it warned that if not properly implemented, such measures may negatively affect the operations of taxpayers.

The government announced in the mid-year budget review that by the end of the 4th quarter of 2022, an electronic invoicing system (e-VAT) will be rolled out to enable GRA have a real-time view of VAT-related transactions for the collection of the tax.

PwC however, contended that if the Ghana Revenue Authority (GRA), for instance, is required to authenticate documents (including invoices, debit and credit notes) before issuance to customers, such may delay the process of doing business.

PwC indicated that the amendments before Parliament is for invoices to be issued using a Certified Invoicing System as default and not the invoices from the Commissioner-General booklet as currently done.

“We hope this proposed measure would consider the size and complexities of taxpayers and their ability to install infrastructure that would enable improved compliance. We recommend implementation in phases where phase 1, for instance, does not require GRA to authenticate documents but only gather real-time information”.
PwC

Amendment of tax laws on e-commerce, betting and gaming

To raise additional revenue, Government reviewed the various laws relating to the taxation of e-commerce, betting and gaming, to align with current trends. These reviews will have to be approved by Parliament to take effect.

Considering the delays in implementing key laws such as the VAT Act for the taxation of e-commerce, betting and gaming, PwC stated that it welcomes the reviews to align the taxation of those sectors with current trends.

“The results of the review should provide increased certainty to relevant taxpayers and increased revenues to Government, provided that the views of key stakeholders have been incorporated in the reviews. We are aware that Parliament is considering the changes for broadening the scope for the taxation of e-commerce with a special sanction of restricting access in Ghana to non-compliant providers of e-commerce”.
PwC

In addition, PwC highlighted that it appears the amendment considered by Parliament will cover both Business-to-Business and Business-to-Consumer transactions but may allow for deduction of input tax which is currently restricted by the principal VAT Act.

“No provisions have been made for dealing with withholding VAT for e-commerce services provided by non-residents. We recommend that taxpayers should consider the additional risks that arise from these amendments. We also recommend to Government to initially restrict the amendment to Business-to-Consumer transactions only”.
PwC

Introduction of VAT penalty on unregistered importers

To promote compliance, Government also announced that it will impose a “recoverable penalty” equivalent to the VAT non-registered persons are required to charge on their goods, payable at the ports of entry, effective October 1, 2022.

This measure is intended to compel importers to register for VAT by imposing a “penalty” equivalent to the amount of VAT they are required to charge on their goods.

According to PwC, Government foresees that this measure will boost VAT revenues by scoping in VAT-registrable importers.

“We, therefore, expect to see an increase in the number of taxpayers registering for VAT. We encourage persons that supply non-exempt goods and/or services in their business to apply to register for and comply with the VAT laws if the value of their supplies exceeds the applicable VAT registration threshold (generally, GH¢200,000 per annum or its quarterly equivalent). Doing this will minimize adverse effects on their activities as a result of this proposed measure”.
PwC

PwC noted that in its view, there are tax laws that provide adequate procedures in ensuring VAT registration and compliance with the charging of VAT. As such contended that if this measure is introduced, prices of goods and services may further increase since unregistered traders may pass the cost on to customers. “We propose an urgent review of our VAT regime as it has become extremely burdensome and not supportive of businesses”, PwC stated.