Prices of goods could be increased between 8% to 12% soon, should the government go ahead to implement the amended Value Added Tax (VAT) rate. The amendment which already has been gazetted as far back as 31st December 2021 will increase the current VAT rate which is a flat rate of three percent with a corresponding one percent Covid-19 levy to almost twenty percent. The information was revealed by the association of importers and exporters Ghana.
Speaking exclusively to an Accra based Citi Fm, the secretary of the association Samson Asaki Awingobit said the amendments if carried through would affect the prices of goods which were cleared as far back as 2021 and are yet to be sold. This he said is worrying, and that businesses will have no choice than to pass it on to the consumer there by increasing the current difficult situation we find ourselves.
The amendment overshadow by E-levy.
The amendment if it is implemented will be in the blind side of majoring of Ghanaian. Ghanaian are currently overshadowed by the debate and the possible economic impact of the E-levy and this amendment if added will be a load too heavy to carry and the possible yoke that will break the proverbial camel's back.
The hidden truth in the amendment is that the government is asking businesses to charge 12.5% VAT, 2.5% of Getfund, 2.5 of health insurance and a further 1% Covid-19 which is summed roughly to be about 19.2%. Out this figure, it is only 12.5% that the importers and exporters can make claim; given the standard that ,VAT should not go beyond 12.5%. The exporters and importer association argued that the difference of the 12.5% from the 19.2% will go as cost to them which they in turned will pass it to the consumer which will likely impact changes in price between 8% to 12%.
Government intention of implementing the amendments in January did not materialize due to the benchmark values.
Given that the amendment was gazetted in December 2021, the government had intended to implement it in January 2022, but the reversal of the benchmark values which was a controversy of its own at the time did not create the right environment for its implementation.
With the benchmark values reversal suspended for now, the government is pushing to have it implemented at the blind side of many. A guideline for its implementation have been issued to the various trading communities and this will likely affect goods already cleared which might have been priced at the previous VAT of three percent.
So, as you make adjustments towards the passage of the E-levy, you might equally want to do same for the amended VAT rate because it will surely affect your budget.
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