The Ghana Revenue Authority has put on hold plans to implement the 17.5 percent Value Added Tax (VAT) charges on non-core financial services.
The new VAT charges would have become operational on Tuesday, July 1st, and would have seen banks and other financial institutions charge 17.5 percent tax on some services rendered to the public.
The 32 fee-based services that is expected to attract the 17.5 per cent tax include current account for corporate bodies, bank draft (payment order), stopped cheques, returned cheques and commission on turnover for corporate organisations.
Others include overdraft processing or renewal fee, revolving acceptance credit and arrangement fee for facilities and statements, closure of accounts and certificates of balance.
There are also charges on online banking (Internet) that include e-statements, e-clients, phone banking, SMS banking, mobile banking, monthly subscription and financial transaction Fees.
The list of fees, commissions and similar charges for financial services that are subject to the tax was developed by the Technical Committee for the Implementation of VAT Act 2013 (Act 870) which was made up of representatives of the Ghana Association of Bankers, the Ministry of Finance and the Ghana Revenue Authority and approved by the Minister of Finance, Seth Terkper.
But the GRA, in a statement issued on Monday, said its implementation has been suspended explaining that the suspension will allow for more time for public education and adequate preparation by the banks for a smooth implementation.
Below is the full statement:
DEFERMENT OF IMPLEMENTATION OF VAT ON FINANCIAL SERVICES
After a careful evaluation of progress of the ongoing publicity and education programme on VAT on financial services, and taking cognizance of the request by sections of the banking community for extension of the period of preparation for implementation of the tax, the commencement date of 1st July, 2014 originally set, has been postponed until further notice.
The decision, taken in consultation with the appropriate stakeholders is to allow for more education of the general public and adequate lead time for the banks to achieve the level of preparedness that will ensure a hitch-free implementation.
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