GRA’s e-VAT system rollout to improve revenue and meet key economic indicators
The Ghana Revenue Authority (GRA) is set to begin the first phase of onboarding 600 businesses onto its electronic value-added tax (e-VAT) system. The move is aimed at improving the country’s tax collection efforts and ensuring a smooth implementation of the policy, which is expected to raise much-needed revenue for the country’s development.
Speaking on the sidelines of an engagement with key Chief Executive Officers in Accra, Edward Apenteng Gyamerah, Commissioner of Domestic Tax at the GRA, explained that the authority will begin the onboarding process after a two-week engagement with taxpayers, which is set to start this week. The e-VAT is an electronic means of issuing VAT receipts or an electronic invoicing system for VAT-registered businesses.
The e-VAT system being introduced is not a new tax, but rather an improvement on how VAT transactions are invoiced. This system applies to both the VAT Flat Rate and Standard Rate Schemes, with all VAT components for both VAT types still holding in the calculation of liabilities.
In recent years, the contribution of VAT to the total tax collection in Ghana has declined consistently since 2017, from 24.88 percent to 19.3 percent in 2021, averaging about 20.73 percent over the period. Indirect domestic revenue collected in 2021 was about GH¢13.75million as against the target of GH¢13.95 million, representing an excess of GH¢202.32million, representing a 1.5 percent shortfall of the target. VAT accounted for 19.3 percent of this amount.
Comparing the contributions of VAT in Ghana to those of neighbouring countries, Mr. Gyamerah pointed out that Togo receives 40 percent, while Benin and Burkina Faso receive 42 percent and around 50 percent respectively. This underscores the need for Ghana to improve its revenue collection efforts, with the introduction of the e-VAT system being a step in the right direction.
According to Mr. Gyamerah, until the country improves its revenue to achieve an appreciable tax-to-GDP ratio, key economic indicators such as interest rate and exchange rate levels will not be met. Failure to meet revenue targets could lead to distress, which can affect several indicators, including exchange and interest rate.
The engagement with CEOs is aimed at educating them on the legal framework and operations of the invoicing system, as well as addressing their concerns about the e-VAT system to ensure a smooth implementation of the policy. The pilot phase was described as extremely successful, and taxpayers are urged to support the authority during the onboarding process to raise the needed revenue for the country’s development.
Addressing questions from taxpayers on the issue of security with regard to their business information, Mr. Gyamerah assured them that their database would be kept safe and secret. He referenced the law that prohibits any tax officer from disclosing taxpayer information and assured taxpayers that GRA officers would be guided by the same provisions of keeping the taxpayer’s information secret.
Isaac Sarfo, Technical Director with GRA, mentioned that amendments of the VAT Act made provisions to abridge the time-frame in which a recipient who is a taxable person receives an invoice from 30 days to 48 hours. He also noted that the earlier amendments of last October, which made provisions for transitional matters, were followed up with a new one. While the old amendment gave taxpayers the right to connect to GRA’s system in one year, the new one does not make any provisions for a transitional period of onboarding, so any businesses scheduled for the process cannot cite the previous provisions as an excuse for not participating in the implementation process.
Speaking on the roll-out plan for the onboarding process, the Project Manager, Philip Acquah, said the piloting phase that onboard 50 taxpayers has been completed, and they are currently looking at onboarding 600 taxpayers in the first phase by June 2023. Phase-two is expected to be completed in December 2023, and will onboard 1,000 businesses with the entire e-VAT implementation process ending in December 2024.
