For some days now, Twitter users have been going on and on about the taxes that are charged at restaurants and eateries in the country.
The reactions were to a receipt that showed how much a patron had to pay for services at a restaurant.
The taxes were as follows:
GFT (GETFL) – GetFund Levy 2.5% NHL (NHIL) – National Health Insurance Levy – 2.5% CRL (CHRL) – Covid-19 Health Recovery Levy – 1% VAT – Value Added Tax – 15% GTL – Ghana Tourism Levy – 1%
These taxes accumulated to an additional 42% of the entire cost of the purchase
In a response by the Ghana Revenue Authority on Twitter on April 7, 2023
GFT (GETFL) – GetFund Levy 2.5% NHL (NHIL) – National Health Insurance Levy – 2.5% CRL (CHRL) – Covid-19 Health Recovery Levy – 1% VAT – Value Added Tax – 15% GTL – Ghana Tourism Levy – 1% SUR – Service Charge – 10%
“The other taxes are not from GRA,” the Authority added.
A Twitter user said “The very thing your guy said he wouldn’t do; is the very thing we’re actually suffering from the most… Do we learn? No.”
Another said, “From taxation to more tax.”
“SC is service charge” 10% and these restaurants still pay their employees under 500cds and still don’t pay in full. These owners should be arrested, trade and workers union should ensure employees are treated right but in the farm there, everyone is not serious,” another tweet said.
One user also noted that “Never really paid attention to receipts as they are not vat refundable for visitors but thanks for the awareness – almost 25% of additional taxes!! There will certainly be a curtailment in expending and supporting these places.”
The organisation observed that the World Trade Organization’s valuation methodology conflicts with the usage of benchmark value in a statement that was signed by its president, Dr. Joseph Obeng.
“It has come to the notice to the members of the trading community that the Ghana Revenue Authority (GRA) intends to increase the benchmark value.
“We hereby categorically state that the use of the benchmark value as a valuation method is illegitimate and contrary to the World Trade Organization’s (WTO) valuations system, which should not be encouraged in every sense of the word.
“It should be noted that the introduction of this system by GRA led to escalation of import duties, which resulted to agitations by the trading public and led to the implementation of the benchmark reduction policy to mitigate the high cost of doing business in the country,” part of the statement read.
GUTA however wants policymakers to intervene in the GRA’s intention to hike benchmark values stressing that it was ‘unacceptable’, especially in times when benchmark reduction policy engagements have not been resolved.
“As we issue this statement, the benchmark reduction policy has become a topical issue that has not been resolved, so for GRA to bring any increment to aggravate the situation in the country is totally unacceptable.
“In view of the aforesaid, we wish to appeal to the policymakers to stop GRA from the abuse of their discretion,” the statement concluded.
Amid recent economic challenges confronting the country, particularly on the free fall of the Cedi, GUTA members last week closed their shops to register their displeasure.
It has come to the notice to the members of the trading community that the Ghana Revenue Authority (GRA) intends to increase the benchmark value.
We hereby categorically state that the use of the benchmark value as a valuation method is illegitimate and contrary to the World Trade Organization’s (WTO) valuations system, which should not be encouraged in every sense of the word.
It should be noted that the introduction of this system by GRA led to escalation of import duties, which resulted to agitations by the trading public and led to the implementation of the benchmark reduction policy to mitigate the high cost of doing business in the country.
As we issue this statement, the benchmark reduction policy has become a topical issue that has not been resolved, so for GRA to bring any increment to aggravate the situation in the country is totally unacceptable.
In view of the aforesaid, we wish to appeal to the policymakers to stop GRA from the abuse of their discretion.
Following a meeting with the Regional Minister Simon Osei-Mensah and the Asantehemaa, traders and business owners in the Ashanti Region’s Kumasi city are starting to reopen their stores.
The Ghana Revenue Authority‘s decision to place tax officers in the shops of business owners to enforce tax compliance in the Kumasi metropolitan and the cost of doing business prompted the shopkeepers to go on a sit-down strike.
On Friday, October 14, 2022, the Regional Minister said in an interview with Accra 100.5 FM’s mid-day news that the decision to reopen the stores was made following his talks with GRA authorities, Traders Advocacy Group Ghana (TAGG), and the Adum Business Community.
He added that for the past three days, he had been holding series of meetings with the various stakeholders in the Kumasi metropolis to find a lasting solution to the impasse between GRA and traders.
He said the GRA has been directed to withdraw their tax officers from the shops of the business operators and maintain them at the big malls and shops in the Kumasi metropolis.
The Ghana Revenue Authority (GRA) has closed a few retail stores recently, including the Palace Mall and the China Mall.
Ghanaians have divided on this practice.
People impacted, including those who work at and patronize these malls, think the shutdown is needless.
However, other Ghanaians contend that if these organizations have indeed been dodging taxes and depriving the nation of much-needed funds for development, then the closure is long overdue.
Why the GRA closed these businesses is as follows:
What many Ghanaians do not know is that the closure of branches of Palace Mall and China Mall was because they failed to enrol on a Certified Invoicing System for the administration of Value Added Tax (VAT) in Ghana following the amendment of the VAT Act 870.
According to the Deputy Commissioner, Operations-DTRD, Kwesi Eghan, the Palace Mall and China Mall are part of 50 selected tax-paying companies that are supposed to be enrolled on the Certified Invoicing System.
He indicated that the deadline for enrolment on the system was October 12, 2022, and that only 25 out of the 50 entities have complied.
Kwesi Eghan also said that the GRA hopes to enrol 600 large taxpayers into the system in its first implementation phase, which is expected to end in December 2023.
He added that by 2024, all taxpayers would have been fully integrated into the platform.
“We want to improve compliance. We are more interested in collaboration than chaining businesses to pay their taxes. But we have no option at this moment than to move swiftly to ensure the right thing is done,” he said.
The Ghana Revenue Authority (GRA) has said it will continue to pursue organizations and institutions that evade taxes across the nation in accordance with its mandate.
According to Joseph Annan, the Authority’s Area Enforcement Manager, the recent closure of China Mall should serve as a warning to the public about the Authority’s willingness to enforce its rules.
“The signal we want to send to the public is that this time around, we are going to enforce the tax laws to the fullest. We have engaged them over months yet, it has always been business as usual, so we are not going to relent on any of the tax laws,” he noted.
Meanwhile, on Monday, October 10, the GRA undertook a special operation that saw the closure of a number of outlets and businesses over non-compliance with Ghana’s electronic VAT system.
The Ghana Revenue Authority (GRA) has the lowest percentage of Value Added Tax (VAT) contribution to overall tax revenue in the West African subregion, at only 17 percent.
Data from the GRA show that the VAT penetration in some other ECOWAS nations is significantly higher than Ghana’s rate of collection.
According to the records, the contribution of VAT (penetration) to total tax income in Benin is 40%; in Cote d’Ivoire, it is 32%; in Niger, it is 29%; in Senegal, it is 33%; in Sierra Leone, it is 25%; and in Togo, it is 43%.
Speaking to the B&FT, Commissioner-Domestic Tax Revenue Division (DTRD) of the GRA, Edward Gyambrah, partially attributed the challenge to inadequate public awareness and education of the prosecutorial laws and sanctions which apply in the VAT regime.
“Most businesses know it is illegal not to issue VAT, but are not aware of the dire sanctions this illegality attracts – and the same for clients who refuse to take such receipts for purchases. This is why we are creating lots of awareness in our ongoing invigilation exercise to boost compliance and improve the collection rate,” Mr. Gyambrah indicated.
Section 41 of the VAT Act, 2013 (Act 870) states that a business making a taxable supply of goods and services shall issue a tax invoice and retain a copy.
Sub-section nine of the Act provides that persons who issue false tax invoices or sales receipts, or use a false tax identification number or fail to issue tax or sales invoices commit an offence and are liable on summary conviction to a fine of not more than 100 penalty units or a term of imprisonment of not less than six months.
The sub-section equally stipulates that a client’s failure to demand a VAT invoice, or a business’s failure to issue it, makes them liable on summary conviction to a fine of not more than three times the tax evaded or to a term of imprisonment of not more than five years, or both.
Fake VAT receipts in circulation
Among key infractions, the DTRD has confirmed that there are fake VAT invoices being used by unscrupulous businesses.
But Commissioner Gyambrah disclosed that buyers must be aware of such fake receipts and make informed decisions to report such acts.
“The contents of a valid VAT invoice have key features such as name, address and TIN of the taxpayer; also, date and time of the supply must be indicated as well as the invoice number. The description to identify the goods and services supplied, and their quantity, must be on the invoice – including the amount,” Mr. Gyambrah stated.
Existing challenges in the VAT regime
The GRA has admitted that it is indeed battling a number of challenges in the VAT regime, which among many include non-issuance, under-reporting and under-carding (when some businesses put cards under invoices and rewrite low amounts to the state – contradicting the price issued to clients).
Latest action to boost compliance
The Authority in a recent mystery shopping exercise arrested two Chinese businessmen for suppressing tax through non-issuance of VAT receipts. These companies, according to the DTRD, are among numerous entities which have printed and are issuing their own invoices.
Interestingly, the two companies had the VAT receipts in their lockers but were not issuing them.
Equally, owners of three local businesses – Champion Dishes, Grace Has Found Us Depot and Celeb Beverage Depot – were last Friday all arrested for failure to issue VAT invoices. Their offence contradicts VAT Act of 2013, Act (870), which makes it obligatory for business operators to issue VAT invoices and pay tax.
Call to action
Commissioner Gyambrah said citizens must support the GRA to boost compliance by reporting businesses that are not issuing VAT receipts, with purchasers also demanding VAT for transactions which attracts taxes, adding: “This is the only way to ensure Ghana will not have to go for aid”.
The Ghana Revenue Authority and the Finance Ministry have reportedly been unable to offer precise information on the non-payment of the capital gains tax, according to the Public Interest and Accountability Committee.
This results from Anadarko selling its 7% stake in the Jubilee and TEN Fields in 2022.
Contrary to Section 6(e) of the Petroleum Revenue Management Act, 2011 (Act 815), Capital Gains Tax was not assessed and collected by the Ghana Revenue Authority in the sale of the 7% interest by Anadarko in the Jubilee and TEN Fields in 2021, according to a release by PIAC on its semi-annual report on September 27, 2022.
But in a “written response to PIAC on the matter, the Ghana Revenue Authority referred the Committee to the Ministry of Finance indicating that the Ministry was exclusively in charge of the transaction.
“The Ministry of Finance, in turn, referred the Committee to the Ghana Revenue Authority for answers,” it said.
PIAC also noted that Ghana made a total of over $731.94 million from oil production in the first half of 2022 from the three fields namely, Jubilee, TEN, and Sankofa Gye Nyame.
This was made up of royalties, tax payments, and surface rentals.
