Parliament Approves Ghana VAT Amendment Bill 2022

  • This review sees a 2.5% increment to VAT in Ghana.

Parliament Approves Ghana VAT Amendment Bill 2022. This is Following a heated debate on the floor of the House between the ruling New Patriotic Party (NPP) Members of Parliament MPs and the opposition National Democratic Congress MPs.

As valiantly as the opposing party argued against the passing of the Value Added Tax (VAT) (Amendment) (No. 2) Bill, 2022, the parliament ended up passing it in one of its last plenary sessions in December 2022 and as a result, increased the rate by 2.5%.

Parliament Approves Ghana VAT Amendment Bill 2022: More Perspective

The opposing party lost when the motion was put to a head count vote at the end of the debate by the Second Deputy Speaker, Presiding, Mr. Andrew Amoako Asiamah.

The result favored the ruling party as the NPP Majority carried the day with 136 votes, while the Minority NDC had 135.

Mr. Ken Ofori-Atta, the Finance Minister, then moved the Motion for the approval of the Bill.

According to Dr. Cassiel Ato Baah Forson, the Ranking Member of the Finance Committee of Parliament, the reason the NDC Minority Caucus was not in support of the Bill is that the recent upsurge in inflation had negatively impacted the real incomes of people. Therefore, raising the VAT rate would only make people’s lives harder.

He mentioned that the National Health Insurance Levy (NHIL) and the Ghana Education Trust Levy (GETFund Levy) were all VAT and, therefore, raising the VAT rate would make Ghana the highest VAT rate country in Africa.

Objectives of the Bill

According to the Chairman of the Parliamentary Committee on Finance, Mr. Kwaku Agyeman Kwarteng, who seconded the motion, here are the main objectives of the bill:

1. To amend the Value-Added Tax Acct, 2013 (Act 870).

2. To increase the Value-Added Tax rate.

3. To modify the Value Added Tax Threshold.

4. To review the transitional provisions for the implementation of the electronic Value Added Tax (e-VAT) system

5. To amend the administrative penalties for non-compliance in relation to the electronic Value Added Tax.

6. To eliminate the Value Added Tax on betting, gambling, and other games of chance.

Mr. Kwaku further mentioned that the Bill will eliminate the exemptions for textbooks and imported newspapers, architectural plans and similar plans and drawings, scientific and technical works, greeting cards, calendars, and other printed materials.

He continued that these materials were now to be liable to VAT in the normal way.

VAT Flat Rate Scheme Threshold

Regarding the VAT Flat Rate Scheme Threshold, Mr. Kwarteng pointed out that unless the Commissioner-General orders it in writing, a taxable person who is a retailer of goods and who makes at the end of any period of 12 months, taxable supplies of not less than GHS200,00.00 but not exceeding GHS500,000.00 was to account for the VAT payable at a flat rate of 3% calculated on the value of the taxable supply.

He said the Committee remarked that due to the current widespread inflationary trends, the lowest threshold of GHS200,000.00 might have become relatively trivial.

He then urged the Ministry of Finance to consider evaluating the threshold in the future.

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