The Ghana Revenue Authority(GRA) has asked businesses to modify their old invoice details to capture the Covid-19 Health Recovery Levy.
Speaking on Ghana Kasa on Agoo T.V/Kasapa 102.5 Fm, the Assistant Commissioner of GRA, Richard Hakeem Quainoo said businesses must begin to adjust their Accounting system to reflect the new taxes introduced by government.
“If you don’t have the Commissioner General’s invoice, then what you can do in the interim is to create a spot on your old invoice where you can distinctively indicate the portion of the Covid-19 Health Recovery Levy of 1%.” Mr. Quainoo told host Bonohene Baffuor Awuah.
This comes following the introduction of the Covid-19 Health Recovery Levy by government.
The additional tax burden is to shore up additional health spending that far exceeds the
annual budget for health following the Covid-19 pandemic, according to government.
The levy was approved by parliament as part of new tax measures by government on March, 30, 2021.
Regulations of the Levy
Parliament has passed the COVID-19 Health Recovery Levy Act, 2021 (Act 1068), herein referred as the Levy. As indicated earlier, in view of Act 1068, the main purpose of the Levy is to impose a special levy on the supply and import of goods and services to raise revenue to support COVID-19 expenditures and to provide for related matters. Specifically, section 1 of the Act provides:
There is imposed by this Act a COVID-19 Health Recovery Levy on the:
- Supply of goods or services made in the country other than exempt goods or services; and
- Import of goods or import of services other than exempt imports.
So for the regulations of the Levy, except the Act provides otherwise, the Commissioner-General (CG) of the Ghana Revenue Authority (GRA) is responsible for the collection of the Levy. The Revenue Administration Act, 2016 (Act 915) shall govern the administration while the Value Added Tax Act, 2013 (Act 870) shall govern the collection of the Levy. The Levy applies to supply of goods unless the goods is VAT Flat Rate in accordance with the second schedule of Act 870. In addition, the Levy is not subject to input tax deduction and the revenue from the Levy collected by the CG shall be deposited into the Levy sub-account of the Consolidated Fund created for that purpose.
New VAT Rate
The COVID-19 Health Recovery Levy is an indirect tax. That is to say, whereas the incidence of the tax is on registered businesses, i.e., manufacturers, service providers, etc., the impact is generally on the consumer. Moreover, as VAT, this is a tax on general consumption which is finally paid by consumers and collected on behalf of the GRA by registered businesses. Thus, it is paid by the consumer as part of the value added to the actual price of an item.
The 2018 mid-year budget amended VAT (Act 948) rate of 15% to 12.5% and detached NHIL and GETFund Levy from VAT by removing their input tax deductibility. Hence, so under the regime of VAT amendment Act, 2018 (Act 970), in addition to COVID-19 Health Recovery Levy 1% to both the current VAT Standard and the VAT Flat Rates, the new VAT rate is 19.25%. Thus, currently the VAT Standard operates as:
GETFUND = 2.5%
NHIL = 2.5%
VAT = 12.5%
With this Levy, this changes to:
GETFUND = 2.5%
NHIL = 2.5%
VAT = 12.5%
COVID-19 Levy = 1%
Source: Ghana/Kasapafmonline.com/Additional files from B&FT
