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Real Estate Stakeholders in Ghana Oppose 17.5% VAT. Stakeholders in Ghana’s Real Estate Sector in a recent communique kicked against the imposition of a 17.5 % Value Added Tax, VAT on the sale of properties that are not moveable.
The recently imposed tax which is expected by the Ghanaian Government to shore up tax revenue is argued by realtors in the sector to hinder the growth of the sector.
Recall that this tax is not a new tax in Ghana as it was newly re-introduced but still to the dismay of the key stakeholders that will remit the tax to the Ghana Revenue Agency, GRA.
Ghana: More Than 30,000 Livelihoods Are on The Line Due To 5% Tax
Real Estate Stakeholders in Ghana Oppose 17.5% VAT: Reactions
The realtor tendered their dismay at the behest of the Ghana Real Estate Developers’ Association, GREDA.
The Association through its Executive Secretary; Mr. Samuel Amegayibor in a recent public statement expressed that the government did not engage them as stakeholders before implementation.
In His Words;
So how do you expect us to be your agent of tax collection and you don’t involve us in the guidelines, and then you just snap on us?
As the Executive Secretary of GREDA, I have not seen what my sector is supposed to help implement for the government to make revenue. Then what are we doing? I think these are some of the things that we are talking about.
Significance of VAT on Immovable Property for Ghana
Africataxreview.com takes a look at the positive and negative impacts of the imposition of this tax considering that the West African country’s debt profile to the World Bank continues to rise with an urgency to shore up revenue.
The likely positive effects are:
- Imposing VAT on building sales provides a quick influx of funds to address budget deficits.
- The additional revenue generated can help in servicing existing debts and avoiding defaults.
- This measure contributes to stabilizing public finances in the short term.
- The government can use the additional revenue for public projects and services.
The likely negative effects are:
- VAT on building sales raises the overall cost of buying and selling buildings.
- The increased costs can reduce demand in the real estate market, potentially slowing investments.
- Higher property costs can lead to inflationary pressure, resulting in higher rents.
- The additional tax can deter investors, leading to decreased investment in the property sector.
- The increased costs can exacerbate housing affordability issues, making it harder for individuals to purchase homes.
- The construction sector may face reduced demand, potentially causing job losses.
- The revenue from VAT on building sales is not sustainable long-term, providing only a one-time fiscal boost.
- Implementing this tax adds complexity to the tax system, requiring additional resources for compliance and management.
- Increased taxation can undermine business and consumer confidence, reducing overall economic activity.
- High VAT rates might encourage tax evasion and underreporting of transactions, reducing the expected revenue.
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