Flat rate tax would be compulsory

Story: Boahene Asamoah

THE Commissioner of the Value Added Tax Service (VAT), Mr Anthony Minlah, has stated that registration for the yet be introduced flat rate scheme will be compulsory.
He said it was to ensure that as many traders as possible in the informal sector were roped into the system to ensure fairness and , that the service would embark on a mass compulsory registration exercise.
He was speaking at a media dialogue organised by the Ghana Journalists Association (GJA) with support from the Business Sector Advocacy Challenge Fund (BUSAC) and KAB Governance Consult on the “impact of the VAT on the promotion of micro-, small- and medium-scale enterprises (MSMEs)” in Accra last Friday.
Mr Minlah said the flat rate scheme was being piloted with members of the Ghana Union of Traders Association (GUTA) and said the successful outcome of the scheme would ensure the extension of the scheme to other areas of the informal sector.
The scheme is currently before Parliament for approval and has a flat rate of three per cent, targeted at the informal sector.
It is restricted to all retailers who make a turnover of ¢100 million per annum but whose annual turnover do not exceed ¢1.2 billion per annum.
“Retailers of goods who are currently registered to operate the standard or regular VAT scheme but whose business turnover does not exceed ¢1.2 billion over a 12-month period shall be converted to the scheme by the service,” he said.
Mr Minlah stressed the need for MSMEs to ensure simple book-keeping records, adding that “the requirement to issue invoices and keep basic records will compel SMEs to improve on their record keeping culture”.
He said the service was currently working with some manufacturers of cash register machines to develop cash registers with special features to be introduced to MSMEs in the country for proper record keeping.
The commissioner took time to explain the VAT law of 1998 and some of the issues that were inherent in the administration of the law.
He explained that VAT was a tax on consumption and that the burden was not on the enterprises but on the final consumer and stated that “the VAT law does not discriminate between SMES and large enterprises or multinationals”,
Mr Minlah said “all enterprises, irrespective of their size will have to meet the same threshold for registration, file returns with payments, subjected to control and verification visits, apply the same VAT rate and suffer the same penalties for non-compliance”.
Mr Minlah used the occasion to call on the general public to demand receipts for goods and services purchased to ensure that taxes were paid to the government to enable it carry out its development projects.
The President of the GJA, Mr Ransford Tetteh, said there was the need for all citizens to ensure that they fulfilled their obligation to the state by paying their taxes, while demanding accountability from the government on the utilisation of tax revenues.
He said the GJA was ready to partner institutions to ensure that the country moved forward in its development agenda.
Mr Tetteh said SMEs were critical to the economic growth of the country and that efforts must be made to support the sector to grow to enable it to offer employment opportunities for the youth in the country.