The Controller and Accountant General, Mr Eugene Asante Ofosuhene, has allayed the fears of the public, especially the business community, that the introduction of the seven per cent withholding Value Added Tax (VAT) is a new tax regime
He said the seven per cent withholding VAT was to reduce revenue leakages and optimise fund mobilisation to help the government prosecute its development agenda.
Mr Ofosuhene was addressing treasury officers and officials of the Ghana Revenue Authority (GRA) at a sensitisation programme on the policy in Kumasi yesterday (Monday).
The sensitisation programme is being carried out to educate treasury officers in all the regions, as well as the heads of accounts at ministries, departments and agencies in the Ashanti, Brong Ahafo and Eastern regions, on the withholding tax policy.
Rather than allow persons making the payment to file returns on their input VAT and output VAT at the end of each month, withholding tax agents deduct the seven per cent ahead on payments made to a VAT registered supplier.
The Controller and Accountant General said it was disheartening that efforts being made by the government to raise revenue for infrastructure development and
Current statistics indicate that the GRA could not achieve its target of raising GH¢24.5 billion at the end of August this year.
By the end of August this year, the authority had been able to collect GH¢22.7 billion, which was GH¢1.8 billion less than the target of GH¢24.5 billion.
“The withholding VAT, therefore, becomes handy as one of the measures put in place to help reduce revenue leakages and optimise fund mobilisation.
“It is, therefore, of absolute importance that the people responsible for the exercise are given the requisite training,” the Controller and Accountant General added.
Ghana Beyond Aid
The Chief Revenue Officer at the Training and Development Department of the GRA, Mr David Lartey Quarcoopome, said the Ghana Beyond Aid mantra of President Nana Addo Dankwa Akufo-Addo would become a fluke if the revenue needed to transform the local economy was not generated.
He said the withholding VAT was a necessary evil because it would help correct the inadequacies in the VAT system and provide a mechanism to raise the money needed to harness local raw materials to grow the economy.
The Ashanti Regional Director of the Accountant General’s Department, Mr Paul Asumadu, said every economy thrived on the effective mobilisation and judicious use of state resources.
He said the new system was to make VAT effective and ensure fairness to all affected people.
The VAT was re-introduced in Ghana in 1998 after a failed attempt in 1995.
The tax system has been increased from the initial 12.5 per cent to 17.5 per cent.
Out of it, 2.5 per cent is paid to the National Health Insurance Authority, another 2.5 per cent is paid to the Ghana Education Trust Fund and the remaining paid into the Consolidation Fund.