The Controller and Accountant General’s Department (CAGD) has initiated a nationwide sensitisation seminar for its employees on the newly introduced Value Added Tax (VAT) withholding scheme to check the leakage of state revenue.
The VAT Act, 2013 (Act 870) has been amended (VAT Amendment Number 2 Act 2017 (Act 954) to provide for the introduction of a VAT withholding scheme as a compliance tool and not a new tax that empowers the Commissioner-General of the Ghana Revenue Authority (GRA) to appoint a person as an agent to withhold VAT on payments made to suppliers who are VAT-registered.
This follows the difficulties associated with the unfairness that is created by VAT-registered taxpayers who charge VAT on their sales but do not comply with their filing and payment obligations, and the new scheme is to enable the GRA to recoup the tax from VAT-registered suppliers who supply inputs to VAT-registered entities.
To be better educated on how the new withholding VAT mechanism works, employees of the CAGD from the Volta, Eastern and Central regions, were last Wednesday taken through the process of withholding the VAT component to the government, a departure from the previous practice of suppliers having to pay that tax component to the state.
The event took place at the Teachers Hall in Accra.
The exercise is to be extended to other CAGD employees in other parts of the country. The withholding VAT is a mechanism to account for and pay VAT on the supply of goods and services by the person making the payment.
Addressing the forum, the Controller and Accountant General, Mr Eugene Ofosuhene, said the new version of withholding tax was a better means of mobilising revenue for the state.
He gave an assurance that the new system would be implemented by the close of this month and urged the employees to take the sensitisation event seriously to help in the revenue mobilisation drive.
Payment to BoG
Mr Ofosuhene said the tax to be withheld from suppliers would be paid into the revenue account of the Bank of Ghana (BoG).
He said the previous system under which the supplier accounted for withholding tax was not working well because some of them failed to account same, hence the new arrangement would rather allow the CAGD to withhold that tax component for the state.
“The new policy allows the supplier to make advance payment in terms of that withholding tax component,” Mr Ofosuhene added.
A Chief Revenue Officer at the GRA, Mr David Lartey Quarcoopome, told the Daily Graphic that the new mechanism would go a long way to discourage suppliers from engaging in illegalities.
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