Organised by the Institute of Chartered Accountants, Ghana (ICAG) on the theme, ‘VAT reforms in Ghana: Any policy alternatives?’ the speakers included Seth Terkper, immediate-past Minister of Finance, Nathan Nettey, Deputy Commissioner in-charge of Policy, Ghana Revenue Authority and William Kofi Owusu Demita, Senior Associate Partner, Ali Nakyea& Associates.

According to Mr Terkper, the current VAT regime should be made to work through strict enforcement as the ultimate consumption tax.

A client-focus approach, he explained was necessary to ensure VAT was consistent with the GRA’s goal for large, medium and small taxpayer as well as pursuing integration to make recordkeeping in particular easy for income tax and VAT taxpayers, based on segmentation.

He said the enhancements must focus on the use of paperless system, thus electronic invoicing and a shift onto taxation of the internet due to significant transactions currently being done on the platform as well as providing the space for other sectors of the economy to merge.

Such enhancements, Mr Terkper said must further take into account cross-border issues to reflect the various trade agreements the country upholds.

He said it was imperative VAT stakeholders focus on enhancements and not brood over basic principles that do not reflect on bad practices and maintain simpler and easy processes to avoid complexities that would not encourage compliance.

Mr Demita noted that while the VAT Flat Rate Scheme (VFRS) was simpler for businesses to calculate and improved government’s tax revenue, its impact on businesses, consumers and the economy at large outweighs the intended benefits.

He said the cascading effect of the tax would lead to an increase in cost for businesses down the value chain which would consequently lead to an increase in the cost of commodities for consumers.

He called for a coherent and comprehensive tax policy design which was presently unavailable in the current VFRS form, adding that effective implementation would be in consonance with government’s goals for imposing a VAT flat rate for a more favourable effect.

Explaining the policy, Mr Nettey insisted that the VFRS was to aid tax compliance rather than lead to the increase in prices of goods and services.

He said the scheme was aimed at addressing the loopholes in the collection of some taxes from businesses, especially those in the wholesale space.

He said GRA was prepared to engage the manufacturers on their concerns to aid the smooth implementation of the tax.

He further rejected assertions that it would increase the cost of doing business in the country, observing that several scenarios considered revealed that, in some situations, the tax obligations of some firms would reduce.

 By Claude Nyarko Adams