VAT Inconsistencies Crippling Revenue Generation – Tax Consultant

Tax consultant Dr Abdallah Ali-Nakyea has expressed worry over uncertainties and inconsistencies in the government’s implementation of the Value Added Tax (VAT).

In his observation, the periodic amendments to the tax regime have become an impediment to generating expected revenue.

Although he said some progress had been chalked since its implementation, more was needed to make the tax regime beneficial to support the government’s development agenda.

According to Dr Ali-Nakyea, the numerous changes to the VAT Act that has led to the introduction, repeal and re-introduction of certain taxes captured under the Act was worrying.

“Generally, tax policies introduced by the government in themselves are not bad, rather the inconsistencies in their implementation is what is bad,” he stated.

“What makes government introduce, revoke and re-introduce certain taxes, taxes like the VAT flat rate. What was the reason for its repeal in the first place, and has the reason for which it was repealed been resolved before its re-introduction,” Dr Ali-Nakyea added.

He said the VAT Amendment Act 2015 (Act 890) introduced a flat rate, refund account, immovable property flat rate, exercise book and other exemptions for the pharmaceutical industry.

Then came the VAT Amendment Act 2, 2015 (Act 904), which decreased the monetary value for the threshold for registration and increased the percentage for refund account.

The VAT Amendment Act 2017 (Act 948), which classified financial services, domestic transport, and further legal backing to the VAT flat rate, was also introduced.

“Then came the VAT Amendment Act 2, 2017, which removed the VAT on the national lottery but now the government is looking to once again tax gambling, so you see the inconsistency I am referring to,” he pointed out.

Dr Ali-Nakyea said these when he delivered a speech on the second edition of the PFM Tax Africa Network Dialogue Series Wednesday, June 16, 2021.

It was on the theme “20 Years of VAT: The Good, The Bad and the Ugly” held on

He believed that the introduction of the VAT had provided the country with a stable tax base and certainty of some revenue generation despite the challenges.

VAT was first introduced in 1995 and meant to replace both Goods and Sales tax, which tax analysts said created inflationary pressures on prices.

But its implementation failed after a few months of introduction due to a lack of proper public education and political pressure.

It was, however, successfully reintroduced in 1998 at 10%.

The discussion on the 20 years of VAT by the PFM Tax Africa Network Dialogue Series sought to answer whether the purpose for which the VAT was introduced had been achieved.

The PFM Tax Africa Dialogue Series has been put together to encourage apolitical discussions on fiscal policies, revenue mobilisation, resource exploitation and management, and national expenditure.

The series is held each quarter. Each dialogue focuses on a pertinent issue of relevance to the management of the Ghanaian economy and its natural resources, especially within the fiscal space.