The Ghana Revenue Authority (GRA) wants a comprehensive review of the country’s Value Added Tax (VAT) policy to simplify the tax system and enhance compliance.
Commissioner General of the GRA, Julie Essiam, emphasized the need for reforms during the 12th Annual International Tax Conference organized by the Chartered Institute of Taxation, Ghana.
Addressing participants, Commissioner General Essiam stated that the current VAT structure is complex and makes it difficult for both individuals and businesses to comply with tax regulations.
She highlighted the importance of implementing tax policies that are straightforward and understandable to all stakeholders.
“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,” Essiam remarked.
She suggested that efforts should be made towards establishing a simplified VAT rate, eliminating the complexities of the current system, which some perceive as causing a cascading effect on the tax burden.
Essiam further noted that simplifying the VAT system could significantly boost compliance, particularly among private sector businesses.
“Tax policies must therefore be flexible enough to grow and optimize tax revenues in tandem with private sector development,” she explained.
Ghana faces mounting pressure to improve its domestic revenue collection as the country struggles with economic challenges and limited access to international capital markets. The GRA has been tasked with increasing tax revenue to support the nation’s development.
In July 2024, the GRA reported that it had collected GH¢68.05 billion in revenue during the first six months of the year, exceeding its mid-year target by GH¢138.69 million. This represented a 0.2 percent excess in collections, demonstrating the authority’s commitment to raising domestic revenue.
Calls for reform have not only come from the GRA but also from the business community. Organizations such as the Ghana Union of Traders Association (GUTA) and the Association of Ghana Industries (AGI) have consistently advocated for a review of the current VAT system.
They describe the existing structure as a disincentive for the private sector, attributing rising market prices, in part, to the VAT regime.
GUTA has pointed to the cascading effect of VAT on pricing, arguing that the current system puts undue pressure on businesses and consumers alike, contributing to inflation and market instability.
During the conference, the President of the Chartered Institute of Taxation (CIT), George Ohene Kwatia, added his voice to the discussion, advocating for the creation of a national tax policy to harmonize activities in the sector.
Mr Kwatia stressed that a unified tax policy could serve as a long-term framework that would guide future governments and reduce the frequent changes in tax regimes driven by shifts in political power.
“If you have a true national policy, it will drive the tax agenda. This will serve as a guideline for every government that comes to power. This will avoid frequent changes in our tax regimes based on the government in power,” Kwatia said.
The 12th Annual International Tax Conference, organized by the Chartered Institute of Taxation, provided a unique platform for policymakers, academia, and tax professionals to discuss improvements to Ghana’s tax system.
The conference encouraged dialogue on balancing tax policy with private sector growth, with the ultimate goal of fostering an enabling environment for businesses to thrive.
The three-day conference, which concludes on August 23, 2024, is themed “Balance Tax Policy and Private Sector Development.”
It has featured presentations and discussions aimed at creating tax reforms that promote economic development while enhancing revenue collection.
The growing consensus is that simplifying the VAT policy will benefit both the government and businesses by improving compliance, boosting revenue, and reducing the financial burden on the private sector.