E-VAT system introduced to check tax compliance and improve business processes
The Ghana Revenue Authority on October 1, 2022 deployed the certified electronic invoicing system commonly known as E-VAT in accordance with the amended Valued Added Tax Act 870. The E-VAT certifies every invoice issued by taxpayers in near-real time for revenue assurance purposes.
Speaking to the public on the Eye on Port program, members of the E-VAT Technical Team of the Ghana Revenue Authority emphasized that the E-VAT is not a new tax.
Mrs. Felicia Omotayo Owusu said the rate of tax remains the same for both the standard and flat rate scheme.
“The rate of tax for VAT in the standard rate is 4.5%, NHIL is 2.5%, GETFUND Levy is also 2.5% and COVID 19 Levy is 1%. For flat rate scheme, VAT is 3% and COVID 19 is 1%. Nothing has changed. It is just the process of issuing the invoice. We are using the electronic means so that we can authenticate and validate the invoices in real or near real time.”
Mr. Patrick Frimpong Danso, on his part said E-VAT system has seen success in countries where it is being deployed such as Kenya, Tanzania, Rwanda and Uganda.
He added that “we have a lot of issues with the old system. The GRA had given certain big shops the authorization to print their own invoices. There was the possibility they could be suppressing sales. If they made 100,000 transactions in a month, they can declare only 200. We had no way to verify. There is a software they could use to suppress sales.”
The GRA in its commencement phase of the program has begun with some 50 taxpayers and by 2024, the Authority will on board all registered taxpayers unto the e-vat system.
According to the GRA officials, his outfit has engaged the various companies being on-boarded unto the system, taught them how to operate the system and provided them with Relationship Managers to serve as a liaison between the GRA and the said company in case of difficulties.
“The Melcom outlets are about 74 across the country and they have all been on-boarded. Same for the China malls and Palace Mall. We started with them so we can use learn from the challenges we faced, rectify them and then onboard the rest who have less complex processes,” Mrs. Owusu said.
The GRA officials however cautioned persons and business entities who may want to circumvent the system to evade tax.
Mr. Frimpong Danso said the GRA is able to monitor all the activities of such tax payers pertaining to the issuance of VAT invoices and will send out a team whenever anomalies are detected.
The officials explained that the invigilation exercise which the GRA embarked on over the past few weeks to check compliance was necessary.
“The officers will cross check receipts and record the sales so that at the end of the week they will tally them and compare them with the returns the taxpayer files. Invigilation is part of our compliance tools,” Mrs. Owusu revealed.
The Ghana Revenue Authority says these initiatives being undertaken will not only improve revenue collection on their part, but also improve business processes.
