Former Minister of Finance Seth Emmanuel Terkper has admonished Ghanaian businesses not to rejoice yet over his successor’s announcement of no increase in the Value Added Tax (VAT) on Thursday.
Delivering the 2018 mid-year budget review, Finance Minister Ken Ofori-Atta announced in Parliament that the VAT will remain 12.5 per cent.
This was contrary to expectations and claims by many especially the Minority in Parliament that a decision has been reached by government for an upward adjustment of the Tax.
Many welcomed Mr Ofori-Atta’s announcement with a sigh of relief but Mr Terkper says it is “a retrogressive step and a further mutilation of the VAT regime”.
It is a VAT increase in disguise. Businesses should not rejoice yet because they cannot claim Input Tax Credit/refunds on 5% of the current 17.5 percent rate. Already, the Flat Rate is denying some registered businesses refunds and Input Tax Credit
— Seth Terkper (@SethTerkper) July 19, 2018
Tweeting a few moments after the reviewed budget was read, Mr Terpker stated: “It is a VAT increase in disguise”.
Ghana's VAT rate is 17.5 percent and that includes NHIL (2.5%) and GEFund (2.5 %). Removing them from the VAT base and making them specific rates (instead of ad valorem) and increasing that rate to earn more revenue (quoting Hon Kwarteng) is a ruse.
— Seth Terkper (@SethTerkper) July 19, 2018
