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26.05.2006 Business & Finance

MDAs Asked To Procure Items And Services From VAT Registered Traders


The Eastern Regional Minister, Mr Yaw Barimah, has warned Ministries, Departments and Agencies (MDAs) to strictly comply with the Value Added Tax (VAT) law, which mandated them to transact business with only VAT registered traders or face the prescribed penalty.

He noted with concern that the non-compliance by some MDAs to pay VAT in their transactions had the potential to deepen the culture of tax evasion at the expense of the country's drive to attain self-sufficiency through internally generated revenue for her development agenda.

Mr Barimah, who gave the warning when opening a one-day seminar on the Financial Administration Act (FAA) 654, was organised by the VAT Secretariat in Koforidua last Wednesday for accountants, auditors and bursars in the Eastern Region.

He reminded them that if the country was to succeed in collecting the right amount of taxes required to ensure rapid national development, it called for close collaboration between revenue collecting agencies and MDAs of Central Government.

Mr Barimah expressed regret that in recent times it had been observed that some MDAs had defaulted to pay VAT on transactions with the trading public or refused to patronise goods and services provided by VAT registered traders, saying, this negative attitude of non-compliance helped to affect fairness and trust in the tax administration.

He warned the accountants and bursars of the consequences for non-compliance with the Act and hoped they would encourage the public to comply with their tax obligations, when dealing with government agencies.

The Eastern Regional Head of the VAT Secretariat, Mr Francis A. Sapathy, urged the participants to co-operate with revenue agencies to raise more revenue to the state, despite some teething problems in the implementation of the Financial Administration and Public Procurement Acts.

He said, as large stakeholders in revenue generation, MDAs compliance with tax laws would encourage traders and businesses to register with the VAT Secretariat and comply with the new Public Procurement Act to raise more revenue for the state.

On concerns by some of the participants that they were compelled to deal with non-VAT registered traders and artisans in the districts, Mr Sapathy hinted that a Special Rate system was being designed to cater for small-scale businesses, since most of them did not keep records of their transactions.

Speaking on the implications for defaulting the VAT law, Mr Evans Appiah of the VAT Secretariat reminded the MDAs that under the law, they were expected to pay VAT on goods and services within a month just as traders or face the penalty. He cautioned them against inflating costs of transaction or expenditure to cheat the state since anyone caught faced prosecution.