The Valued Added Tax (Amendment) (No. 2) Bill, 2022 has been approved by Parliament.
The Value Added Tax Act, 2013 (Act 870) will be amended in order to raise the VAT rate from its current 12.5 percent to 2.5 percent.
The bill will examine the transitional conditions for the adoption of the electronic value added tax (e-VAT) system and change the VAT threshold, helping the government to generate GH2.7 billion in revenue in 2023.
Additionally, it will eliminate the VAT on wagering, gambling, and other games of chance as well as amend the administrative sanctions for non-compliance with the electronic VAT.
On December 19, 2022, the Minister of Information, speaking for the Finance Minister, presented and read the measure for the first time in Parliament.
After then, it was sent to the Finance Committee for review under a certificate of urgency.
No longer an exemption for printed matter
In presenting the committee's report, the chairman of the finance committee, Kwaku Kwarteng, stated that the committee, by a majority vote, recommended to the House to adopt its report and pass the bill into law in light of the need to raise additional domestic revenue for the development of the nation.
He claimed that the committee had taken notice of the bill's elimination of the exemptions for imported textbooks, newspapers, architectural plans, and similar plans and drawings, as well as periodicals, magazines, trade catalogues, price lists, greeting cards, almanacks, calendars, diaries, stationery, and other printed materials.
He said that those materials would now be subject to VAT in the typical manner.
Limits for the VAT flat rate system
He informed the House that the committee had noticed that a taxable person who sold goods and made taxable supplies at the end of any 12-month period totaling not less than GHC 200,00 but not more than GHC 500,000 was required to account for the flat-rate VAT that was due.
The minimum threshold of GH2,000wo may have diminished in importance as a result of recent general inflationary trends, the committee noted. As a result, it urged the Ministry of Finance to review the thresholds in the future.
Unable to come to a consensus
Mr. Kwarteng informed the House that the Minority Caucus on the committee, led by the Ranking Member, Dr. Cassiel Ato Forson, opposed the bill during its consideration because the recent spike in inflation had a negative impact on people's real incomes and raising the VAT rate would result in hardship for them.
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