Suspension of tax stamps: Businesses urged to leverage opportunity

BY: Emmanuel Bruce

Tax and Auditing firm, Deloitte Ghana has encouraged small businesses to fully take advantage of the extension of tax stamp concession to reduce their tax burden.

It also advised them to use the opportunity to plough back exempted profits to support business recovery during these difficult economic times.

The firm also advised vehicle owners to also take advantage of the extension of the Vehicle Income Tax (VIT) to cushion themselves in these difficult times.

This was contained in its 2022 Mid-Year Budget review report.

Payment of tax stamp for specified small businesses and Vehicle Income Tax (VIT) on specified class of vehicles were suspended for the second to fourth quarters of 2021 and this was further extended to cover the first and second quarters of 2022.

The Minister for Finance has noted that to mitigate the continuing impact of COVID-19, the government was extending the suspension of payment of quarterly income tax for small businesses and VIT to the end of December 2022.

This means that specified small business owners such as artisans, masons, carpenters, welders, mechanics, hairdressers, tailors, seamstresses, ‘chop bar’ operators, market traders; and operators of commercial vehicles which ordinarily pay quarterly tax via tax stamps or VIT stamps will not be required to purchase these tax stamps up to end of 2022.

It should however be noted that to obtain the tax exemption benefit, the qualifying business owners must be registered with the Ghana Revenue Authority and should have fulfilled any outstanding tax stamp obligations before the suspension commenced.

Upfront VAT payment by unregistered importers

Deloitte in its report also asked the GRA to provide proper guidance on how the upfront VAT payment by unregistered importers would be implemented.

It said while this appeared to be a good initiative to rope in defaulting registrable VAT suppliers, it was looking forward to receiving guidance from the GRA on its implementation, especially with respect to separation of VAT and how to segregate VAT registrable importers from non-registrable importers.

In the Government’s bid to ensure effective VAT compliance and to increase VAT revenue, the Minister of Finance announced plans to impose a penalty on VAT registrable importers who are yet to register from October 1, 2022.

The penalty to be imposed will be equivalent 12.5 per cent of the customs value of taxable goods imported by non-registered persons and payable at the ports of entry.

That is, non-registered importers will be charged a penalty amount equal to the estimated output VAT that would have been charged on the sale of the imported goods should they have registered for VAT.

There is however an opportunity for non-registered importers to recover the penalty amount as input VAT if they register for VAT and file their VAT returns as required under the Value Added Tax Act, 2013 (Act 870).

Platform for property rate collection

To enhance collection and administration of property rate, the Minister of Finance announced the launch of a Unified Common Platform (UCP) that will digitise property rate collection by the last quarter of 2022.

As the Minister noted, the GRA would be engaged to assist the Metropolitan, Municipal and District Assemblies (MMDAs) to implement the UCP. This is to help facilitate property rate assessment and collection.

Deloitte in its report noted that the launch and use of the UCP was expected to improve property rate administration and enhance revenue generation at the local government level.

“However, given that this policy was earlier announced in the 2022 Budget Statement and Economic Policy read in 2021, we expect Government to intensify efforts aimed at seeing to the timely implementation of this policy and bridge the current budget deficit,” its stated.

Electronic VAT invoicing

As part of efforts to improve and digitise revenue mobilisation, the Minister announced the introduction of an electronic VAT (e-VAT) invoicing system to take effect from October 1, 2022.

The system will require VAT registered businesses to issue VAT invoices through a Certified Invoicing System (CIS).

The CIS is to be certified by the Commissioner-General (C-G) and will be integrated into the invoicing system of the C-G.

Deloitte said the roll out of this system would give GRA access to transaction data in real time and close current gaps in VAT reporting and collection.

It said Small and medium businesses could, however, also take advantage of this technological initiative to mitigate the challenges encountered with maintaining VAT records and enhancing VAT compliance monitoring and assurance.

“Implementation of this e-invoicing system is expected to be completed within one year from the passage of the amendment Act, with a possible extension of three months.

“To avoid any logistical challenges, taxpayers are encouraged to start immediate preparations to comply,” it stated.