The Value Added Tax (Amendment) Bill, 2017, has been passed into Law by Parliament, to reduce the cost of supplies of real estate and transportation by air in order to provide relief to consumers.
The purpose of the Bill was to amend the Value Added Tax Act, 2013 ( Act 870), to classify the supply of financial services, domestic transportation of passengers by air and supply of immovable property by a real estate developer as exempt supplies.
The new Act also gives legal backing to a VAT Flat Rate Scheme that will facilitate collection of VAT on the supply of goods in the distribution chain and to provide for related matters.
Delivering the Report of the Finance Committee on the floor of the House, the Chairman, Hon. Assibey-Yeboah (Dr.), said the Committee noted that with the passage of the Bill into Law, all taxable retailers and wholesalers of goods will be required to account for the Value Added Tax (VAT) at a flat rate of 3% calculated on the value of the taxable supply, unless the Commissioner-General of the Ghana Revenue Authority (GRA) directs otherwise.
The Committee further observed that taxable persons to whom the flat rate shall apply would not be qualified for input tax deduction in respect of the supply of the taxable goods.
Appearing before the Finance Committee, the Chief Director of the Ministry of Finance informed the Committee that the Bill would remove the VAT on the supply of financial services. He added that however, this removal would not affect VAT on professional services in the nature of accountancy, investment and legal advice. This is because the VAT on these professional services has always existed.
As to how much revenue would be lost as a result of the passage of the Bill, the Committee was briefed that the fiscal impact would amount to an estimated 266.94 million Ghana Cedis of revenue loss.
It is worth noting that Government as part of the 2017 Budget Statement and Economic Policy proposed to reduce or abolish some taxes in order to bring relief to consumers and to stimulate growth of certain sectors of the economy, hence the amendment of the Value Added Tax Act, 2013 (Act 870).