MoF Facts On Banks And New VAT Charges

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Mr Ato Forson a Deputy Finance Minister
Mr Ato Forson

Cassiel ATO-FORSON, Deputy Minister of Finance
Cassiel ATO-FORSON, Deputy Minister of Finance

The Ministry of Finance and the Ghana Revenue Authority have noted with concern publications in the media on banks charging VAT on services including salaries and savings.

According to the Finance Ministry,?salaries, savings, deposits, loans and payment with cheques?are all exempted from VAT. The new VAT Act, Act 870, according to release issued by the Ministry, only affects fees that are charged on non-core financial services such as data processing, legal, accounting, actuarial, notary and consulting services.

?We also wish to state that this is not a new law, it has been in place since 1998. Banks were charging fees on services they were rendering. Banks are also already paying the VAT on inputs used to render these services.?

?Act 870 requires the Banks to register for VAT and they can offset the VAT against the VAT they charge. Therefore, the impact of the VAT is not the full 17.5 per cent as being speculated. VAT registered businesses/persons can also offset the VAT (input VAT) they pay to the banks against their VAT (output VAT).?

The general public is also informed that this enforcement of the tax obligation should have started from January 2nd?2014, but the banks were allowed till May to enable them to fully prepare to implement the new policy.

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