The Controller and Accountant General, Mr Eugene Asante Ofosuhene, has allayed the fears of the public, especially the business community, that the introduction of the seven per cent withholding Value Added Tax (VAT) is a new tax regime.
Rather, he said, it was an innovation within the current tax regime to reduce future uncollected debts and enhance the collection of taxes upfront for the government.
He said the seven per cent withholding VAT was to reduce revenue leakages and optimise fund mobilisation to help the government prosecute its development agenda.
Mr Ofosuhene was addressing treasury officers and officials of the Ghana Revenue Authority (GRA) at a sensitisation programme on the policy in Kumasi yesterday (Monday).
The sensitisation programme is being carried out to educate treasury officers in all the regions, as well as the heads of accounts at ministries, departments and agencies in the Ashanti, Brong Ahafo and Eastern regions, on the withholding tax policy.
Rather than allow persons making the payment to file returns on their input VAT and output VAT at the end of each month, withholding tax agents deduct the seven per cent ahead on payments made to a VAT registered supplier.
The Controller and Accountant General said it was disheartening that efforts being made by the government to raise revenue for infrastructure development and all-round transformation to reduce abject poverty were being thwarted by shortfalls in revenue generation.
Current statistics indicate that the GRA could not achieve its target of raising GH¢24.5 billion at the end of August this year.
By the end of August this year, the authority had been able to collect GH¢22.7 billion, which was GH¢1.8 billion less than the target of GH¢24.5 billion.
“The withholding VAT, therefore, becomes handy as one of the measures put in place to help reduce revenue leakages and optimise fund mobilisation.
“It is, therefore, of absolute importance that the people responsible for the exercise are given the requisite training,” the Controller and Accountant General added.