The complexities and rigidities associated with the computation of some tax handles in the country will in no time be a thing of the past as the Ghana Revenue Authority (GRA) has announced initiatives to simplify these taxes.
The Commissioner-General of GRA, Julie Essiam announced this commitment when she was speaking at the 12th Annual International Tax Conference organized by the Chartered Institute of Taxation, Ghana on Thursday, August 22.
Business groups such as the Ghana Association of Industries (AGI), and the Ghana Union of Traders Association (GUTA) among others over the years have expressed concern over the structure and complicated nature of VAT.
Given the inherent challenges, Julie Essiam agrees with the business associations that reforms are needed to simplify the computation of some taxes. She further emphasized the importance of simple and flexible tax handles admitting that compliance could be enhanced.
“These policies must be simple and easy to understand by everyone and all of us. As we look into the future as a revenue authority, we believe that the future tax policies should focus on the simplification of tax handles,” the Commissioner-General noted.
She further added they will “work towards having a simple rate for VAT and avoid the perceived cascaded effect of the simplicity of rates under the current regime. Tax policies must therefore be flexible enough to grow and optimize tax revenues in tandem with private sector development.”
This comment from the GRA’s Commissioner-General comes a few days after the flagbearer of the ruling New Patriotic Party (NPP), Dr. Bawumia announced during his manifesto that his government will reform the VAT system including other tax measures.
“We will reform the Value Added Tax system by consolidating all levies into a single line item, which will be treated as part of input and output VAT, eliminating the cascading effect of the current regime,” Dr. Bawumia announced.
It is unclear whether the announcement by the GRA is a validation of the Vice President’s campaign promise or otherwise.
However, the President of GUTA, Dr. Joseph Obeng speaking to The High Street Journal a few days ago expressed the excitement from GUTA about the Vice President’s promise to reform VAT. According to him, the promise was one of the proposals the traders’ association made to the NPP’s Manifesto Committee.
This commitment from both the GRA and the Vice President, if followed through will provide a win-win situation for both the government and the businesses. Some businesses are discouraged from complying with their tax obligations due to the computational difficulties and hence evading taxes due the state.
The average entrepreneur or trader struggles to understand and compute tax processes such as VAT and often this leads to unintentional non-compliance. But with simple and easy computational methods, businesses are saved the trouble of frustration while the government earns its deserved revenue.
This could also potentially improve the business environment as business owners get time to focus on their core businesses rather than spend considerable time struggling with complicated tax computations.
