Some tax analysts have called on the Ministry of Finance and the Ghana Revenue Authority to engage retailers that may be affected by the VAT Flat rate announced in the 2022 budget.
The new policy imposes a flat levy on businesses operating below ¢500,000 thresholds.
The policy however imposes over a 19% levy on businesses above the threshold, but most businesses operating above the ¢500,000 thresholds are unaware.
Speaking to Joy Business, Tax Consultant, Timore Fraincis Boi warned that the situation could have dire consequences on the revenue target in the 2022 budget.
“As I speak to you now, there are a lot of people in the informal sector who do not have an idea about the levy. If the current trend continues, it may have negative implications on the revenue target”, he said.
Mr Boi added that the manner in which the tax is being implemented has also resulted in a price hike, a situation that could have been avoided through engagement.
“It is my view that the exclusion of wholesalers and high-end retailers from the application of the flat VAT rate may result in price increases by 16% in the first course of the supply chain,” he said.
The new policy, which was contained in the 2022 Budget was unknown to many business owners until it was passed into law and started having an effect on prices.
Meanwhile, a Deputy Finance Minister, Abena Osei Asare, has stressed that the VAT Flat rate was introduced to create a system of uniformity in the regime.
She explained that the previous system discriminated against a section of retailers, causing the government to lose revenue.
Per the law, retail businesses operating above the ¢500,000 thresholds are required to apply the standard VAT rate which is about 19.25%.
This saw prices of goods in supermarkets and malls going up by close to 16%.