The Ghana Traders Association (GUTA) has called on the government to address the challenges of the Value Added Tax (VAT) Flat Rate System (VFRS) before migrating traders to the Standard Rate System (SRS) .
The Association noted that although trading in the market takes place under the same conditions and in the same environment and around the same customers, three different payment systems exist.
These are those who operate under VFRS, SRS and those who are not qualified to register and charge VAT.
This situation, said Dr. Joseph Obeng, President of the Association, has resulted in a disparity between competing merchants: “It caused most merchants to close their doors.”
He said this in a statement copied to the Ghana News Agency, noting that such a major tax policy should be uniform and non-discriminatory.
“It is also important that policy makers understand that taxes should not be designed in a way that makes it hard for operators, thereby destroying their businesses. Rather, it should be simplified to facilitate compliance and increase the level of compliance,” he said.
The Association said that: “In view of this, we feel it is very necessary to draw the attention of the government to the fact that the commercial community, in particular our members, will not be able to migrate to the system of standard rate”.
He also called for the government’s attention to resolve the issue of non-availability of input VAT, non-registration and issuance of VAT invoices and surcharge for the absence of input VAT.
“In this case, the VAT regime should be; either a flat rate for all traders to operate or a uniform standard rate that guarantees fairness and equity or is made optional for traders to choose one of the two,” GUTA urged.
The Association said it hoped the government would come to terms with the situation and the concerns raised and that it would: “Carefully and seriously consider all the facts presented and act accordingly.”
The VFRS was introduced in 2017 as a special method of collecting and accounting for VAT/National Health Insurance Levy (NHIL) for all VAT-registered retailers of chargeable goods with an annual turnover of greater than 200,000 GHS and does not exceed 500,000 GHS. .
These registered taxpayers were charged VAT/NHIL and the COVID-19 Health Recovery Tax (HRL) at a marginal rate of 4% on the value of their taxable sales.
The tax was introduced to make tax accounting easier for small businesses, which were mainly in the retail, wholesale and distribution chains.
In line with tax policy proposals contained in the 2022 Budget Statement, the Parliament of Ghana passed the Value Added Tax (Amendment) Act 2021 (Act 1072) to bring into force the SRS.