Ghana Plans VAT Automation To Improve Compliance, Revenue Performance


Ghana Plans VAT Automation To Improve Compliance, Revenue Performance

Ghana’s revenue collector has revealed plans to automate the collection of Value-Added Tax (VAT) by the second quarter of 2020, a move meant to improve compliance and eliminate loopholes in the tax collection process.

The digitization measure will ensure that the tax is credited directly to the Ghana Revenue Authority (GRA) at the point of purchase by linking teller systems, including point of sale (POS) devices of companies that are eligible to pay VAT. The goal is to minimize human interference in tax revenue collection as much as possible.

“Basically, it’s a service that, through your phone, POS devices or normal till systems, ensures that at the time of sales, the VAT component is deducted and immediately credited to the tax authority automatically,” said Ammishaddai Owusu-Amoah, acting Commissioner-General of the GRA. “With this, you don’t have an interval between the time of collection and the time of accounting for what has been collected on behalf of the authority.”

As well as bringing convenience in the payment and filing of VAT returns, the move will help broaden the tax net and enhance compliance, ultimately increasing revenue collection for the state. Reports indicate that Ghana only realizes a fraction of the potential revenue of VAT in the country. Compliance levels are poor with many small businesses either not issuing VAT receipts at all or falsifying their declarations.

In recent times, there have been reforms aimed at increasing tax compliance and revenue in Ghana. The tax system underwent several significant changes in 2018. And under the budget for 2019, the government added to those changes, with its agenda focused on compliance

The VAT collection automation thus is in line with the overall goal of improving compliance, expanding the tax net to include a larger chunk of the informal sector, eliminating time lapses as well as the use of cash and cheques, as banks would become collection agents for all taxes, Owusu-Amoah said.

The new measure will ensure that from the banks, individuals and corporate bodies will be able to know their tax obligations, pay their taxes and also collect their tax clearance certificates at the same place. “Our core mandate is tax collection, not cash handling; that is the job of the bank. So we will eliminate cash and cheques from our system,” the GRA chief explained, adding that this would improve revenue collection.

According to Owusu-Amoah, the agency has made significant progress in the automation bid in terms of engaging various service providers before it identifies a specific provider after a tender process. The initiative will see Ghana join several other countries that have automated VAT collection such as Rwanda, Tanzania, and Fuji.

In addition to digitizing the collection process, the GRA would continue its VAT invigilation and also embark on mass education to sensitize the public, especially those in the informal sector, for them to understand the need to voluntarily comply.

Besides VAT automation, the GRA has other initiatives in place. These include the creation of a more visible interface with the public to make it easier for taxpayers to reach the authority to lodge complaints about redress and strict enforcement of a code of conduct for its staff. It also plans to introduce e-commerce taxes in ways that would stir growth in the industry as well as improve revenue performance in the oil sector.


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