The Ghana Revenue Authority (GRA) will deploy new physical and electronic devices for Value Added Tax (VAT) implementation. This initiative aims to significantly improve revenue mobilization across the country. The Commissioner-General of the GRA, Anthony Kwasi Sarpong, stated that these devices are a "game changer" for tax collection.
Parliament recently approved the Fiscal Electronic Device Act, mandating businesses to install certified electronic fiscal devices (EFDs) at their points of sale. These EFDs will record every transaction, automatically calculate VAT, and report directly to the GRA in real-time. This system targets closing an approximate 40% compliance gap in current VAT performance.
This move is part of Ghana's broader strategy to enhance domestic revenue generation and reduce reliance on external financing. The country has consistently faced challenges in broadening its tax base and ensuring compliance, particularly within the informal sector. The new system seeks to formalize transactions and capture revenue that previously went uncollected, contributing to national development goals.
Commissioner-General Anthony Sarpong highlighted the current compliance issues. He noted, "For every 10 businesses that exist, only 4 pay VAT." He added that many businesses charging VAT are not remitting the collected funds. The new VAT reform is expected to address these issues directly, ensuring that collected taxes reach the state coffers.
The GRA Board recently visited the Asantehene, Otumfuo Osei Tutu II, at the Manhyia Palace to update him on their mandates and achievements. The Asantehene urged the GRA to expand the tax net to include the informal sector. He also charged the board to prevent revenue leakages, emphasizing the importance of collaborative work for Ghana's benefit.
The new system is set to commence in the coming months, starting with mid-size shops and supermarkets nationwide. This phased rollout will allow for adjustments and ensure smooth integration into the existing business environment. The GRA has already mobilized over GHS 80 million in the first half of the year, with an end-of-year target exceeding GHS 170 million.
George Kweku Ricketts-Hagan, Board Chair of the GRA, acknowledged initial pushbacks from the business community regarding new taxation systems. He noted that understanding of the system has improved. He believes this increased comprehension will facilitate better revenue collection for national development.
The successful implementation of these devices could significantly impact Ghana's fiscal health. Increased VAT collection will provide the government with more resources for public services and infrastructure projects. Businesses will need to adapt to the new reporting requirements, ensuring their systems are compatible with the EFDs. The GRA will closely monitor the rollout and compliance rates to assess the effectiveness of this reform.
This initiative represents a critical step towards modernizing Ghana's tax administration. It aims to create a fairer and more efficient tax system. The focus on real-time data and automated reporting is expected to reduce opportunities for tax evasion and improve overall transparency in the VAT collection process.