Ghana Traders Demand for Withdrawal of 3% VAT

Over the past three weeks, there have been growing attention on the Ghana Revenue Authority (GRA) over the revival of the 3% VAT flat rate.

Following the re-implementation of the 3% VAT flat rate according to the amended revenue Act 948 (2017), the country has seen nothing but divided interest or opinions among major stakeholders in Ghana’s private sector.

Last week, it was a statement by the Minority in Parliament claiming that the implementation of the said VAT policy as stipulated in a recent practice note issued by the GRA was not consistent with the details of the amended Act particularly, the aspect that defines ‘who is an importer’. Hence, it constituted grounds for illegality and would be challenged in court if not redressed by the government.

The Association of Ghana Industries (AGI) as well as the country’s Food and Beverages Association  expressed their disapproval of the 3% VAT flat rate on the grounds it would lead to a cascading effect which would result in an increase in the price of products..

Contrary to the views of AGI and its food and beverages counterpart, the Ghana Union of Traders Association in defending its position on the 3% Value Added Tax (VAT) flat rate; said, it wasn’t unaware of the acclaimed cascading effect but it is better the existing regime which cascades a VAT at 17.5%.

Adding that it was better to pay 9% aggregate tax across each trade transaction (wholesaler, retailer, and consumer) with the 3% VAT flat rate system than to pay 52.5% if government should go by the previous 17.5%.

Now, the Wholesalers, Importers and Shop Owners Union of Ghana (WISUG) has asked the government to within fourteen days (2 weeks) withdraw the 3% VAT flat rate, or else the union would have no choice than to adopt ‘radical’ measures to express their grievances.

Speaking to some members of the press earlier, WISUG Chairman – Joseph Ablor said the union was: “reminding the government of its policy of making the local businessman the pivot of economic development and growth. However, should government not engage us, we will resort to more radical action that will be announced at an appropriate forum”.

He argued that the group, “considers [the 3% VAT flat rate] very inimical to the growth of the local businesses because the final consumer will have to pay about 18 percent in practical terms”.

The trade group is rather asking the government to return to the system where goods in the range of Ghc20, 000 or above would pay 17.5% VAT rate while those below it would go by the 3% rate.