Paying Taxes Complicated And Costly In Ghana – Doing Business Report …As Economy Slips To 118 In Ranking

01-11-2019

Paying Taxes Complicated And Costly In Ghana – Doing Business Report …As Economy Slips To 118 In Ranking

The World Bank’s Doing Business Report 2020 has shown that businesses find paying taxes more complicated and costly after government introduced reforms on how the Value Added Tax (VAT) is applied to businesses.

In the 2019 budget, the GETFund and National Health Insurance Levy (NHIL) which were previously components of the 17.5 percent VAT were converted into straight levies. The effect of this meant that the 2.5 percent levy for the GETFund and 2.5 percent for NHIL will now be applied on the total value of a product and no longer on the value added, a move that means consumers and businesses will pay more.

It is this reform in the tax system that the World Bank said has made tax payment in Ghana complicated and costly, thereby resulting in a significant drop on the ranking for Paying Taxes to 152 from 115 the previous year.

“Ghana made paying taxes more complicated and more costly by converting a portion of the recoverable value added tax into two new levies that are a cost to the firm: the Ghana Education Trust Fund and the National Health Insurance Levy,” the Doing Business report said.

Ghana scored 49.5 marks out of 100 in the Paying Taxes Indicators, lower than the sub-Saharan average score of 54.7 marks, and placing the country 25th for this category in the region. Neighbouring Cote d’Ivoire placed 1st, scoring 64.8 marks in this category.

The situation also contributed to Ghana moving four steps backward in last year’s overall Doing Business ranking to 118 out of 190 economies accessed. Overall, Ghana scored 60 marks – the same score as last year in the Doing Business Report.

 

Government action

Government has introduced a Business Regulatory Reform Programme, which is a 3-year initiative coordinated by the Ministry of Trade and Industry and implemented in partnership with other stakeholders to ensure a friendly business environment in the country.

This includes the Ease of Doing Business Reform Initiative, which will ensure that Ghana’s position in the annual Doing Business Ranking improves significantly.

Again, in the programme is a One-stop Registry of all Business Regulations that will ensure the inventory of business-related acts, legislative instruments, regulatory notices, and administrative directives are available in a single electronic registry. This will provide businesses with an easily accessible, non-stop repository of up-to-date information on all business regulations in force in Ghana.

Another important programme is the Regulatory Impact Assessment (RIA), which will be introduced in order to build a permanent system for quality control of new business regulations and safeguard the gains made from reforms. This programme will provide policymakers with a tool to objectively assess the likely positive and negative effects of a new regulation, and propose better alternatives to achieve the agreed policy objective.

Lastly, through the programme government will grant targeted relief for SMEs from regulatory requirements at early stages of development, in order to stimulate higher levels of entrepreneurship and job creation in strategic sectors, and gradually phase-in standard rules as the firms begin to grow.

 

Source (online) : https://thebftonline.com/2019/economy/paying-taxes-complicated-and-costly-in-ghana-doing-business-report-as-economy-slips-to-118-in-ranking/

Source (offline): B&FT issue No 2969 cover page and page 3 , Monday 28th of October 2019

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