With the advent of an electronic invoicing system that removes the many cases of abuse used by taxpayers to deny the state enormous income, the Ghana Revenue Authority (GRA) has stepped up efforts to boost tax compliance and produce more revenue by introducing automated vat invoicing. This move is also to curtail abuse by GRA staff.
Phased implementation of the automated vat invoicing
On October 1, the authority began rolling out the value-added tax (VAT) e-invoicing system to 600 major taxpayers who account for more than 90% of VAT income.
By 2023, medium-sized taxpayers should be included in the exercise; in 2024, all enterprises should be included.
The GRA can monitor real-time transactions in businesses where the automated VAT invoicing system has been implemented, unlike the manual system, making it difficult for taxpayers to under-invoice or evade paying VAT.
According to GRA estimates, if the many cases of abuse that the manual invoicing system is pronged to decisively deal with, the country’s VAT contributions to tax collection might climb to 30% from the present 18%.
“All Large Taxpayers will be required to file taxes electronically beginning April 1, 2022. Selected medium-sized enterprises and all High-Net-Worth Individuals will be required to file taxes electronically beginning June 1, 2022. Requests for Tax Clearance Certificates (TCCs) will be automated and made readily available. You will need a TCC in order to access government services.”Commissioner General, Dr. Ammishaddai Owusu – Amoah
An electronic tax clearing certificate (TCC) system that also aims to get rid of the abuses the current system is prone to, was launched at the same time as the system.
The two programs are a part of a tax digitalization strategy that the authority is promoting, according to Edward Apenteng Gyamerah, Head of the Domestic Tax Revenue Division (DTRD) at GRA.
He claimed that the authority was optimistic that eliminating the fraud that the manual processes had been vulnerable to will boost revenue generation through e-invoicing and e-TCC.
Last month, GRA swoops and mystery purchases in a number of businesses found non-compliant institutions and forced their activities to temporarily cease.
Mr. Gyamerah stated that the GRA hoped to increase the VAT contribution to overall revenue from the present 18% to 30% by 2024 in conjunction with e-invoicing.
He claimed that whereas VAT collections in Ghana’s peer countries averaged 30% annually, they were only about 18% in those same countries.
He claimed that as a result of the abuses the manual method was prone to, more VAT revenue was being wasted.
VAT Act changed to accommodate automated vat invoicing
The Head of DTRD stated that the government and authorities changed Section 42 of the VAT Act, (2013) Act 870 as amended, to make e-invoicing mandatory and the only method for generating VAT invoices in order to address this issue.
Through this, he stated, “we will be able to increase compliance, we will have an audit trail, and that will allow us to know the number of transactions every minute so that we can fairly assess the taxes.”
Mr. Gyamerah stated that the system would be implemented utilizing two distinct paths when addressing the manner of implementation.
He claimed that GRA integrated its software for creating the e-VAT invoices into theirs to enable takeoff for companies that already had their own platform for issuing VAT.
But he said that the authority will provide its automated vat invoicing software free of charge to companies without their own systems.
Regarding the e-TCC, he stated that organizations merely needed to enter their information into the GRA-created e-TCC portal in order for certifications to be generated automatically.