If you did not know this, then take it from the SCANDAL now, the new Value Added Tax (VAT) law 2013, Act 870, makes it compulsory for all who use banking services to pay a 17.5 per cent Value Added Tax (VAT) on any transaction they carry out with a bank in Ghana.
The new law received Presidential assent on 30th December 2013 and received notification in the gazette on 31st December 2013 thus making all the provisions of the law effective from that day.
Under the heading “Scope and Coverage of the Value Added Tax”, the law extends the coverage of VAT to include “the supply of Financial Services that are rendered for a fee, commission or a similar charge”.
The Act defines Financial Services to mean “the provision of insurance; issue, transfer, receipt of or dealing with money whether in domestic or foreign currency or any note or order of payment of money, provision of credit or operation of a bank account or an account of a similar institution.”
What this means is that each time you draw a check, or make a physical withdrawal from your account over the counter, or receive money into your account, or transfer money from your account or even take a loan facility from your bank or conduct any business that attracts a fees or charge with a bank, you will be required to pay the 17.5 per cent.
The law applies to all salaried workers who draw their salaries from the bank, all traders, taxi drivers who deposit their sales with their banks, all customers who pay for goods and services with checks and indeed anyone who goes to any financial institution to conduct and such similar business.
Bankers are very tight-lipped over this new policy except to confirm that they have received a very long circular from the Bank of Ghana on the subject and detailing all the services that should attract the 17.5 per cent VAT.
One Banker who wants to remain anonymous however made bold to add that the policy will collapse the banking industry and that it will discourage depositors from using the banking system and that the government efforts at achieving a cashless economy has been delved a deadly blow with the new VAT law.
A Tema-based industrialist, Mr. Kwaku Manu said it appears the government is deliberately suffocating the market and that since 2013 the government has been increasing taxes, import duties and levies, utility tariffs prices and petroleum products and now VAT on banking services.
“This policy measure seems to be the final nail on the coffin of the Ghanaian economy because of its deadly impact on businesses in the country, he added.
The new VAT law also has serious adverse consequences for the Manufacturing and Trading sectors of the economy. Most consumables are imported into the country on credit bases. VAT is paid on the goods as and when they are sold out of the bonded warehouses.
With this new law however even after paying the VAT on the sold goods, when the importer makes a transfer of funds to settle his suppliers abroad for the goods shipped the importer has to pay another VAT for the financial service.
The story is the same for the Manufacturing sector. Mr. Kwaku Manu said “this is double jeopardy for businesses like mine. I pay VAT on the goods I produce with the raw materials supplied to me and yet when I have to make payments to the suppliers of the same raw materials abroad I am required to pay another VAT for transferring the money.”
The double jeopardy does not end there. For those have to regularly transfer monies for pay the school fees of their wards abroad or even internally; let them get ready to pay VAT. For those who pick up cash to go on dates with their loved ones. Remember you will pay VAT for picking the cash from the bank and again pay VAT for the lunch you will have with your date. So therefore next time you pick your bank statement, look out for how much VAT you have paid.
Source: The Scandal