The Ghana Revenue Authority (GRA) has commenced the application of the 3% VAT Flat Rate to replace the previous 17.5% Input – Output VAT computation approach effective July 1, 2017.
The old approach, which suffered low compliance due to the extensive paperwork in filing VAT returns is being replaced with the 3% Flat Rate to make it easier for tax payers to comply.
According to the GRA, while the old 17.5% input-output tax was charged on value added, the new 3% Flat rate is charged on turnover. The new simpler approach is not anticipated to increase prices or the cost to businesses. It is rather aimed at simplifying the process for VAT compliance and reduce Tax avoidance.
Ahead of the implementation, the GRA has been engaging various stakeholder groups on the new approach providing education and guidance on how to comply with the new approach.
Some business groups who have expressed reservations and inhibitions about the new approach have also been encouraged to engage the GRA for further guidance on how to comply with the new approach.
The NPP government in its campaign and 2017 Budget, promised to simplify the VAT regime by replacing the 17.5% INPUT-OUTPUT Tax with a 3% Flat rate. An earlier delay in its introduction was to engage more broadly with stakeholders before introduction.
GRA officials say they are additionally ready and on standby to assist VAT registered persons who need further education and assistance to ease the process of complying with the new approach.
Source:Starrfmonline.com