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28.04.2007 Business & Finance

Flat VAT rate scheme for retailers

By GNA

Retailers with annual turnovers of between 100 million and 1.2 billion cedis respectively are to pay three percent of their turnovers as Value Added Tax (VAT) under a Flat Rate scheme.

Mr Peter Danso-Kyeremanteng, Head of the VAT Service Office in Ho announced the measure at a workshop for personnel of Ministries, Departments and Agencies (MDAs) in Ho regarding their responsibilities under the VAT Act (1998) and the Financial Administration Act 2003.

"This particular Act has not been strictly enforced and we all stand the risk of non-compliance. We have been dealing with some that are not registered. The law may catch up with us sooner or later", Mr Danso-Kyeremanteng cautioned.

He said it was therefore important that the MDAs reviewed their dealings with traders not registered with the VAT Service.

Regarding the Flat Rate Scheme, Mr Danso-Kyeremanteng explained that it followed amendment to the VAT service law arising from consultations between the Ghana Union Traders Association (GUTA) and the VAT Service.

He explained that retailers to be covered under the Flat Rate Scheme would not claim input credit.

Mr Danso-Kyeremanteng said retailers under the Flat Rate Scheme, will be required to fill a special return and invoice different from those paying 15 percent VAT.

He said the Flat Rate Scheme sought to address the difficulty of the retailers in keeping records on their transactions.

The participants urged the VAT Service to give critical consideration to credit sale arrangements between the MDAs and suppliers and service providers in future amendments to the VAT law.

They argued that suppliers often complained of having to pay VAT on goods and services provided on credit to the MDAs from bank loans, which attract high interests.

They also recommended to the VAT service to scrap the threshold approach to determining VAT so that people engaged in petty business activities could also pay VAT arguing that the little that such people would pay would add up to something substantial.

The participants also urged the VAT Service to organize such frequent interactions with the MDAs to be updated on issues concerning the VAT.

Source: GNA

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