Ghana’s revenue from VAT hits GH₵1.2bn between Jan-May 2023

The Ghana Revenue Authority has reported a significant increase in Value Added Tax (VAT) revenue collection between January and May this year, totaling 1.2 billion Ghana cedis. This represents a substantial 92.4% surge from the 649.9 million cedis collected in the same period last year. The surge in revenue is attributed to the country's ongoing tax reforms and increased efforts to boost domestic tax revenue. Abdallah Ali-Nakyea, Director at Ali-Nakyea & Associates, highlighted the strategies employed by the Revenue Authority to enhance tax compliance and enforcement. Ali-Nakyea praised the two-pronged approach adopted by the Ghana Revenue Authority, which included conducting verification visits to selected taxpayers to ensure compliance with tax laws and implementing the automation and digitization of the VAT process for certain taxpayers. This automation allowed for the electronic generation of invoices, providing real-time data to the authorities on VAT collection and compliance. The initiative revealed instances where taxpayers were not remitting VAT collected, thus closing the existing tax gap and improving revenue collection. The successful implementation of these strategies showcases the effectiveness of leveraging technology in tax enforcement and revenue collection. Ali-Nakyea emphasized that the move towards automation is a positive step in narrowing the tax revenue gap and maximizing domestic tax revenue mobilization. Furthermore, Ghana is anticipating an additional revenue stream from a newly introduced gaming tax, with a forecast of 400 million Ghanaian cedis. The gaming tax, set at 10% of profits, has sparked mixed reactions among Ghanaians. While some view it as an additional financial burden, others recognize the necessity of contributing to national revenue through taxation. Ali-Nakyea explained that the gaming tax operates as a withholding tax, where gaming operators are required to withhold and remit 10% of winnings to the government. He highlighted the importance of educating stakeholders and the public on the tax implications to ensure compliance and avoid tax evasion. Effective communication and engagement with stakeholders are crucial in garnering support for the tax and achieving the projected revenue targets. Despite the positive developments in revenue collection, Ali-Nakyea cautioned that the current inflows may only scratch the surface of Ghana's substantial debt gap. While increasing revenue is a step in the right direction, he emphasized the need for comprehensive measures, including expenditure cuts, tackling corruption, and ensuring transparency in government spending to address the broader fiscal challenges. In conclusion, while the surge in VAT revenue and the introduction of the gaming tax signal progress in Ghana's revenue generation efforts, sustained implementation of tax reforms, effective governance, and public engagement will be critical in ensuring long-term fiscal stability and economic growth.