By: Franklin ASARE-DONKOH
The Ghana Revenue Authority (GRA) will from Tuesday, June 6, 2023, impose an upfront payment of 12.5 percent (12.5%) tax on the value of goods imported by persons or companies who are yet to register for Value Added Tax (VAT) with the Authority.
According to the management of GRA, importers of taxable goods who are non-VAT registered will pay in advance 12.5% VAT in addition to other payable taxes, on the total value of the goods imported.
The implementation of the 12.5% upfront payment, was announced during an engagement with editors from some key media houses.
Giving the rationale behind the implementation of the 12.5% upfront payment which is not a new tax but one of the many tax tools adopted by the Authority to maximize revenue, the Commissioner of the Domestic Tax Revenue Division of the GRA, Mr. Edward Gyambrah, explained that the proposed upfront payment was in line with the amendment of the VAT Act 2013 (Act 870) which provided for the upfront cost of VAT by unregistered importers.
The Commissioner of the Domestic Tax Revenue Division of the GRA, explaining further, maintained that the law, which was passed in 2020, was to ensure parity in the pricing of goods on the market as well as establish fairness as VAT-registered taxpayers charge the tax on their imported goods.
He was of the view that the new tax tool would help identify unregistered importers of taxable goods who do not charge VAT on their goods for sale.
Another added advantage that the new tax tool brings, according to Mr. Gyambrah would enhance tax compliance as importers of taxable goods would be required to register with the GRA and file their tax returns.
“The 12.5% VAT upfront payment is a compliance tool and not a new tax. We are only asking importers to comply with the law that all importers should register with the GRA before doing business. All businesses that are tax compliance will not be affected,” The Commissioner of the Domestic Tax Revenue Division of the GRA reiterated.
Mr. Gyambrah noted that the upfront VAT payment could be recovered when the importers finally register with the GRA, file their tax returns, and pay all taxes due the state.
He disclosed that his outfit had engaged all various critical stakeholders, including the Ghana Union of Traders Association (GUTA), Association of Ghana Industries (AGI), Institute of Freight Forwarders, and Customs Brokers Association of Ghana among others ahead of the implementation of the amended law.
Mr. Gyambrah hinted that as part of efforts by management and staff of the Authority to meet its GH¢106 billion revenue target for the year 2023, the GRA was embarking on various initiatives including e-VAT invigilation, mystery shopping, while the tax net had been widened to cover the gaming, betting, and lottery industries and the night market economy.
“Again, the GRA had intensified the prosecution of tax defaulters to deter businesses and individuals from evading taxes.
All these moves are geared towards increasing the contribution of VAT to our country’s tax receipts. We have the lowest VAT contribution on the continent. Currently, VAT makes up less than 20 percent of the total tax receipts, while our neighbours are recording between 36% and 50% VAT contributions,” Mr. Gyambrah added.
Meanwhile, a member of the technical committee for the implementation of the 12.5% VAT upfront payment, Mr. Wiseborn Koranteng, during a presentation said, per the law, businesses that fail to register for tax with the GRA were liable to a penalty that was two times the amount of tax on taxable goods from the time they were required to apply for registration until they filed an application for registration with the Commissioners General of the GRA.
He, however, noted that the current law provided that the 12.5% VAT upfront payment could be recovered within six months after the importer had registered for the tax and filed a return.