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01.02.2006 Business & Finance

Value Added Tax (amendment) bill passed

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Accra, Feb 01,GNA- Parliament on Wednesday passed the Value Added Tax (amendment) bill that seeks to reduce the tax burden on selected items through zero-rating.

The items are agricultural machinery, implements or tools used in agriculture, textbooks and exercise books and locally produced items due to unequal tax treatment.

According to the memorandum to the bill signed by Mr Kwadwo Baah-Wiredu, the Minister of Finance and Economic Planning, the bill would make the VAT regime more conducive to make the locally produced items more competitive.

"The present state of the law is that agricultural machinery, exercise books and textbooks are exempt goods and therefore not subject to tax and hence taxes paid on inputs used in their production are incorporated into the price of the final product."

It said the effect is that the tax paid on the finished product will be zero and will not be charged.

"By implication, the cost of locally produced goods will be completely devoid of VAT when they enter the domestic market. This will place them in a position to compete favourably with imported items." The memorandum said: "Lower prices will also have a positive impact on the relevant sectors and boost business activity."

In a related development, The House passed t he Customs and Excise (Duties and other Taxes) (Amendment) Bill. The bill seeks to amend the Customs and Excise (Duties and other Taxes) Act to provide for zero rating of imported dumpers (Heavy duty trucks for carrying mineral ore in mining areas) and importation of parts, components and accessories to assemble light aircraft and for related matters. 01 Feb 06