The Finance Ministry has clarified that salaries, deposits, savings and payments with cheques will not be affected by the Valued Added Tax (VAT) charges on financial services.
A statement signed by the Deputy Minster of Finance, Cassiel Ato Baah Forson said: “We wish to state categorically that salaries, savings, deposits, loans and payment with cheques are all exempted from VAT. The new VAT Act, Act 870 only affects fees that are charged on non-core financial services such as data processing, legal, accounting, actuarial, notary and consulting services.”
The general public on Tuesday raised concerns on the Citi Breakfast Show on the new 17.5 percent VAT charges on banking and financial transaction by the banks effective May 2014.
But in a statement to clarify and explain what the 17.5 percent VAT charge meant, the deputy Minister said the fees only affects non-core financial services.
Below is the statement signed by the Deputy Minister
NO VAT CHARGES ON SALARIES, SAVINGS ETC AT THE BANKS
The Ministry of Finance and the Ghana Revenue Authority have noted with concern publications in the media on banks charging VAT on services including salaries and savings.
2. We wish to state categorically that salaries, savings, deposits, loans and payment with cheques are all exempted from VAT. The new VAT Act, Act 870 only affects fees that are charged on non-core financial services such as data processing, legal, accounting, actuarial, notary and consulting services.
3. We also wish to state that this is not a new law, it has been in place since 1998. Banks were charging fees on services they were rendering. Banks are also already paying the VAT on inputs used to render these services.
4. Act 870 requires the Banks to register for VAT and they can offset the VAT against the VAT they charge. Therefore, the impact of the VAT is not the full 17.5 per cent as being speculated. VAT registered businesses/persons can also offset the VAT (input VAT) they pay to the banks against their VAT (output VAT).
5. The general public is also informed that this enforcement of the tax obligation should have started from January 2nd 2014, but the banks were allowed till May to enable them to fully prepare to implement the new policy. END
Hon. Cassiel Ato Forson (MP)
Deputy Minister (F)
By: Evans Effah/citifmonline.com/Ghana