Emmanuel Kofi Nti
The Ghana Revenue Authority (GRA) has directed all financial institutions to discontinue charging the 17.5 percent Value Added Tax (VAT) on financial services in the country.
Government in the 2017 Budget Statement abolished VAT on financial services and also announced some tax reliefs.
To give legal effect to the policy on VAT on financial services, Parliament passed the Value Added Tax (Amendment) Law (Act 948, 2017) last Friday to make the supply of financial services as exempt.
The GRA, in statement signed by the Commissioner General, Emmanuel Kofi Nti said, “In line with the passage on the VAT (Amendment) Act, we hereby inform all to discontinue charging Value Added Tax (VAT) on financial services in the country.”
The VAT on financial services was part of the 11 ‘Nuisance’ taxes that Finance Minister, Kenneth Ofori-Atta said the government would abolish.
The scrapping and review of the taxes, according to the Finance Minister, is to lessen the burden on consumers and businesses to boost the private sector which has been identified as the engine of growth.
The abolishment of the taxes mostly affected businesses in the aviation sector, finance sector, real estate industries and ports and harbours.
The 11 key taxes abolished included the one percent Special Import Levy, 17.5 percent VAT/NHIL on financial services, 17.5 percent VAT/NHIL on selected imported medicines that were not produced locally, import duties on raw materials and machinery for production within the context of the ECOWAS Common External Tariff (CET) Protocol and 17.5 percent VAT/NHIL on domestic airline tickets.
The rest were the 5 percent VAT/NHIL on Real Estate sales, Excise duty on petroleum, Special Petroleum tax rate from 17.5 percent to 15 percent, duties on the importation of spare parts, levies imposed on ‘Kayayei’ by local authorities and additionally taxation on the gains from the realisation of securities listed on the Ghana Stock Exchange or publicly held securities approved by the Securities and Exchange Commission (SEC).
Government reduced the national electrification scheme levy from 5 percent to 3 percent, reduced public lighting levy from 5 percent to 2 percent.
It also replaced the 17.5 VAT/NHIL rate with a flat rate of 3 percent for traders.
By Cephas Larbi