Ghana Union of Traders Association in Support of VAT rate

By Sam Edem
Dr. Barima Ameyaw
Dr. Barima Ameyaw

Contrary to the position held by some trade associations in the country, the Ghana Union of Traders Association (GUTA) has publicly given its support to the rejuvenated 3% Value Added Tax (VAT) rate.

In an interaction with the press after a meeting with Ghana’s Finance committee yesterday, head of GUTA - Dr. Barima Ofori Ameyaw said the 3% Value Added Tax flat rate is not new.

He noted that the rate has been in existence since the Kuffor administration,  only it wasn’t effectively implemented. He reiterated the fact that GUTA had impressed on the President Kuffor government to introduce the flat rate, hence it intends to remain consistent on its support for the 3% rate.

Mr Ameyaw pointed out that the flat rate was to provide a system where every trader, regardless of the volume of their business could pay.

Some other industry players are however warning the new rate would result in price increases of goods on the market.

Paramount among them is the Association of Ghana Industries (AGI) and the Food and Beverages Association (FBA) who have argued that the rate will have a ‘cascading effect’ on trade.

In practice, a situation where all players in the chain (wholesaler, retailer and the consumer) will have to pay the 3% VAT resulting in an aggregate of 9% at the end of each transaction.

On that point, GUTA argues that the cascading effect is a constant regardless of the rate. Hence, it is better to pay 9% across a transaction as opposed to a staggering 52.5% if government were to go by the previous 17.5% VAT rate.

The AGI and FBA have said members would have no option than to shift the additional cost to the consumer which would mean - a gross increases in the prices of goods and services in the country.