Ghana GRA VAT Compliance Challenges Hinder Domestic Revenue Mobilisation

• The Ghana Revenue Authority (GRA) is grappling with significant Value Added Tax (VAT) compliance challenges, which are hindering the country's efforts to improve domestic revenue mobilisation.
• Only about four out of every 10 businesses in Ghana are properly charging and accounting for VAT, while the rest either remain unregistered or fail to remit VAT collected from customers.
• The GRA is implementing the Fiscal Electronic Devices Act, which requires most businesses to conduct transactions through government-approved electronic devices, giving the Authority greater visibility over economic activity in real-time.

The Ghana Revenue Authority (GRA) is grappling with significant Value Added Tax (VAT) compliance challenges, which are hindering the country's efforts to improve domestic revenue mobilisation. The situation has been exacerbated by the fact that several businesses collect VAT from customers but fail to remit the funds to the government. According to Commissioner-General Anthony Kwasi Sarpong, only about four out of every 10 businesses are properly charging and accounting for VAT, while the rest either remain unregistered or fail to remit VAT collected from customers.

The GRA's assessment has revealed major weaknesses in VAT registration and compliance among businesses, with a significant proportion of companies not registering for VAT or failing to remit the tax collected. This has resulted in a substantial gap in revenue collection, which is impacting the government's ability to fund its development projects.

The GRA's efforts to improve VAT compliance are being bolstered by the implementation of the Fiscal Electronic Devices Act, which requires most businesses to conduct transactions through government-approved electronic devices. This will give the Authority greater visibility over economic activity in real-time and enable it to monitor transactions as they occur. The technology will also facilitate the reconciliation of VAT amounts due at the end of each month.

However, the GRA is aware that technology alone cannot resolve the compliance challenges. As part of its pilot programme, the Authority has already exposed attempts by some businesses to circumvent the system. To address this issue, the GRA is combining the deployment of technology with stronger compliance measures to ensure businesses accurately account for VAT and improve revenue collection.

The GRA's efforts to improve VAT compliance are crucial for the country's economic development. The implementation of the Fiscal Electronic Devices Act will require businesses to adapt their accounting practices and ensure accurate remittance of VAT. This will not only improve revenue collection but also enhance transparency and accountability in the tax system.

Lawyers and compliance officers should be aware of the GRA's efforts to improve VAT compliance, particularly with the implementation of the Fiscal Electronic Devices Act. They should advise their clients on the need to adapt their accounting practices and ensure accurate remittance of VAT to avoid any potential penalties or fines.

Lawyers and compliance officers should be aware of the GRA's efforts to improve VAT compliance, particularly with the implementation of the Fiscal Electronic Devices Act, which may require businesses to adapt their accounting practices and ensure accurate remittance of VAT.

Source: Original reporting via MyJoyOnline Ghana