The Ghana National Chamber of Commerce and Industry (GNCCI) says government’s move to overhaul the Value Added Tax structure has finally killed off a system its members have battled for years.
CEO Mark Badu Aboagye says the reform brings long-awaited relief after what he describes as a frustrating tax regime that made compliance stressful and pushed up business costs.
He said the Chamber had been calling for changes for three to four years. He recalled that every year, they made the same input into the budget.
Reform the VAT. Make it simpler. Reduce the effective rate. He said they were excited when government announced a review last year, but it dragged.
It took almost a year for any action. He said this year’s budget finally delivered what they wanted. And for them, a major problem has now been fixed.
When asked how the change affects GNCCI members, he said their biggest complaint was the complexity.
Mr Badu Aboagye said the previous structure forced businesses to deal with Standard VAT combined with straight-line levies.
He said even the computation was a challenge. Not because members did not want to pay. But because calculating it was difficult.
The CEO said the straight-line levies created direct costs for businesses. He mentioned the NHIL, the GETFund levy and what he called the “Almighty Covid levy.”
Mr Badu Aboagye said these were charges on which businesses could not claim input VAT, so they became a pure cost.
The GNCCI boss said the consolidation of these levies into the Standard VAT has changed everything. It is now a VAT that allows businesses to claim input VAT. It no longer becomes a direct cost.
He said this will influence prices and ease pressure on firms. He added that the discussion on how prices shift will be a major issue going forward.
Mr Badu Aboagye said the new regime is simple. Businesses will pay 20%. They now know how to calculate output VAT, input VAT and the deductions before paying what is due government.
He said this clarity alone lifts a major weight off companies.