Business

3% VAT flat rate good – GUTA counters AGI

The Ghana Union of Traders Association (GUTA) has presented a counter petition to the Finance Committee of Parliament, stating that it supports the implementation of the 3% VAT flat rate introduced by the government.

The Association disagrees that the implementation of the 3% flat rate will lead to price increase of goods as earlier suggested by the Association of Ghana Industries (AGI) and the Importers and Exporters Association of Ghana.

This follows an earlier petition submitted by AGI, kicking against the new tax implementation with the reason that it would increase the prices of goods and services.

Addressing the media after a meeting with the Finance Committee of Parliament, the President of GUTA, George Ofori, argued that the 3% VAT flat rate is not something new, so he does not understand why some businessmen make it seem so.

“The issue of this Value Added Tax flat rate has actually been in the system or existence for 10 years or so now and people are actually creating the impression that it is a new thing that government has actually brought into the system,” he said.

“No, it is not a new tax. It actually came around President [John] Kufour’s time,” he added.

He went further to express trades’ excitement about the implementation of the new tax especially the ease with which they can calculate it and the fact that it will inure to a collective benefit.

“So that we can pay the 3% which is the simplest form of actually paying the tax…GUTA and the traders in general are happy that this 3% has been brought back,” he remarked.

The GUTA president also warned that any businessman who deliberately increases prices of their goods and services as a result of the 3% flat rate may be doing so at their own risk.

“In any case, if people decide to increase their prices because they think that because of the 3% let’s deliberately increase our prices, we are in a competitive market; we’re not in a monopolistic market. Once you do that the market forces will bring you out because you cannot determine prices. It is market forces that determine prices of good on the market,” he cautioned.

The Deputy Finance Minister on his part hopes that the purpose of the tax is not taken out of context but understood for what it is.

“It would appear some of our friends in business did not understand some aspects of the policy, we have explained that. We are happy to see that the differences are diminishing. I’m confident as we continue to engage the flat rate policy will be seen for what it really is; a simplified tax arrangement that ought not to lead to any increment in prices, that is supposed to simply tax computation and collection and that ultimately would help both government and business.”

The Value Added Tax (Amendment) Bill 2017 was passed by Parliament in April 2017 through a certificate of urgency.

It requires all taxable retailers and wholesalers to account for the Value Added Tax (VAT) at a flat rate of 3%.

The law took effect July 1 and has since stirred up some mixed reactions from the business front.

By Denis Pwaberi Wedam|3news.com|Ghana

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