VAT on financial services yields positive results
The Commissioner-General of the Ghana Revenue Authority (GRA), Mr George Blankson, has said the Value Added Tax (VAT) on financial services was worth implementing since it had started yielding positive returns.
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He said despite the initial criticisms and fears expressed by some stakeholders that it would affect the banking sector, “it has turned out that the charges are not even being felt. At the end of the month the returns are paid in line with the law.”
The implementation of the 17.5 per cent VAT on fee–based financial services took effect at the beginning of this year.
Financial institutions provide a range of services, including fee-based services such as advisory services; safe-keeping, fees on ATM transactions and portfolio management services.
ATAF Conference
The Commissioner-General was speaking at the opening of a four-day conference on VAT in Africa themed, “Designing and implementing effective VAT systems in a globalised economy”.
The conference, which was hosted by the GRA in collaboration with the African Tax Administration Forum in Accra, is being attended by participants from 18 African countries. It seeks to provide the platform for participants to share ideas and discuss how to make VAT more efficient and effective.
Mr Blankson said VAT was the largest contributor to government revenue in Ghana.
Though Mr Blankson could not give much information on specific yields from the VAT on financial services, he was optimistic that the significant revenue mobilised would facilitate the development of the country.
“For VAT implementation to be effective, it depends on how it is designed. When there are more exemptions, it creates avenues for evaders to take advantage,” he said.
He said since VAT was a consumption tax, it was difficult to evade and easy to administer, unlike the other direct taxes such as income tax, which, with sophisticated skills, some businesses tried to avoid.
African voice on tax
The Director for Strategy and Planning at ATAF, Mr Lincoln Marais, said ATAF was a platform that brought together member countries to deliberate on global tax matters.
“Though member countries have their local challenges in ensuring that they collect the revenue required by the government, we cannot afford to lose sight of the global issues because obviously they affect us,” he said.
He added that ATAF also assisted its members to develop effective and efficient tax systems.
