5-year jail term awaits defiance against VAT


The Ghana Revenue Authority (GRA) is currently undertaking a mystery shopping activity to detect businesses which are non-compliant with Value Added Tax (VAT) issuance – a criminal activity which could attract up to five-year jail term, Commissioner of Domestic Tax Revenue Division (DTRD), Edward Gyambrah, has disclosed.

Addressing selected journalists in Accra on the GRA’s ongoing VAT invigilation exercise across the country, Mr. Gyambrah said the revenue collector is more interested in collaborating with businesses to honour their tax obligations; however, prosecutorial sanctions of up to five-year imprisonment applies if persons are found to break the law on VAT regulation.

The GRA expects that all suppliers of taxable items – goods or services – issue VAT invoice as required by law. In the same vein, the customer is required by law to obtain invoice if such transactions attract VAT.

Thus, Mr. Gyambrah said: “Under no circumstance should any business ask: do you need VAT invoice or normal invoice? That question, he noted, amounts to suppression of tax – an action which is criminal under the Revenue Administration Act”.

The GRA, he indicated, has been prosecuting lots of VAT defaulting businesses since last year, adding: “Only that we do not announce it since we are more interested in collaborations on tax payment”.

“We are already out there in disguise, making purchases and requiring invoices, all in a bid to detect and track non-issuance, fake issuance or any alteration that may lead to avoidance and evasion,” the Division’s Head revealed.

Current challenges with VAT

Data from the GRA has indicated that current VAT contributions to total tax revenue is less than 20 percent, a performance which is low compared to other countries in the sub-region regarding penetration.

This year, the authority’s tax target of GH¢80.3billion is at risk as the E-levy, which is expected to contribute some GH¢7billion to meet the target, was implemented late and has been yielding little impact.

Equally, a number of challenges are causing the country’s inability to meet its VAT target, many among which include non-issuance, under-reporting, under-carding (where some businesses put cards under invoices and rewrite low amounts to the state), contradicting the price issued to clients.

The VAT invigilation exercise

To shore up revenue and increase compliance, the DTRD of the GRA has, since September 1, 2022, been undertaking a nation-wide invigilation of all businesses registered to charge and collect VAT.

The exercise, which is in line with the authority’s mandate to improve voluntary compliance is also meant to educate businesses on the need to pay taxes to government, and to create awareness that the law frowns on illegalities in the VAT regime.

The invigilation ensures that clients are given the right invoices and the tax paid to government without being diverted.

The exercise is covering businesses in the VAT chain including manufacturers, wholesalers, distributors, service providers, among others.

“The invigilation cuts across the country throughout the rest of the year and into next year. We don’t have specific timelines to end this exercise. We want massive compliance as much as possible to meet our revenue target for the year,” Mr. Gyambrah anticipated.

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