The Association of Ghana Industries(AGI) is urging the government to reconsider its current Value Added Tax (VAT) calculation for indigenous companies whose annual revenue exceeds GH₵ 500,000 per annum to reduce the economic burden on local industries.
The AGI is worried about a 21% tax on production which is affecting the production cost of local businesses.
The 21% tax comprises 15% VAT and 6% COVID, GETFUND and NHIS levies, which are negatively impacting the growth of local industries.
Consequently, the Greater Accra Chairman of AGI, Tsonam Akpeloo, has called on the government to revise the computation.
“The way the VAT is being calculated currently means that we are being charged double or we are paying VAT on VAT. This essentially means that government adds the levies, i.e. NHIS, the Covid and GETFund, which is totalling 6 per cent to the cost of the products before applying the VAT and the other levies again,” he said.
“In effect, in one business or one transaction, we have to pay double tax, and this calculation is not helpful. Already industries are struggling. There is no point in getting them to pay tax in this manner, so we want the government to reconsider its computation and reverse it to the time before 2017,” he appealed.
In November 2022, the government increased the Value Added Tax (VAT) by 2.5 per cent.
This moved the tax policy from its previous percentage of 12.5 per cent to 15 per cent.
The government has also justified the need to maintain the COVID levy to help raise revenue to implement its projects.
The Ghana Revenue Authority (GRA) announced the amendment of different tax laws from January 1, 2023, including measures announced as part of the 2023 Budget.
The two main measures included a reduction in the Electronic Transfer Levy headline rate to 1% and an increase in the VAT rate from 12.5% to 15.0%.