Prices of goods & services to go up May 1-Importers & Exporters

The Importers and Exporters Association of Ghana has hinted at plans to increase the prices of goods and services.

The Association in a statement said the increment will take effect May 1, 2021.

The statement explained that the imposition of the Covid-19 Health recovery would see the standard VAT rate adjusting upwardly to 19.25% from its previous rate of 18.125% hence, consumers must prepare for increment in the price of goods and services.

Read the full statement below

IMPORTERS AND EXPORTERS ASSOCIATION GHANA
PRESS RELEASE-
PUBLIC SHOULD EXPECT PRICE INCREMENT IN GOODS AND SERVICES EFFECTIVE MAY 1ST

With the Ghana Revenue Authority poised to implement the 1% COVID-19 Health Recover Levy on Monday the 1st of May, the Importers and Exporters Association of Ghana, is urging the general public to embrace themselves for a possible increment in goods and services.

With the imposition of the Covid-19 Health recovery which will see the standard VAT rate adjusting upwardly to 19.25% from its previous rate of 18.125%, consumers must be made aware that such increment will be applicable to goods imported or exported in and out of the country.

The new levy which according to the government will help to raise revenue to support COVID-19 expenditure, will also be an addition to existing sales taxes, hence the need for consumers to be made aware of the increase in the price of goods and services.

HOW DOES THIS CHANGE THE STRUCTURE OF SALES TAXES
Currently, the VAT standard rate without the soon to be introduced COVID-19 levy stands as;
GETFUND- 2.5%
NHIL- 2.5%
VAT- 12.5%

This means with the old tax system whereby a 1,000ghc product was sold or valued at 1,181.2ghc with tax inclusive, the additional 1% COVID-19 levy will see the same product being sold or valued at 1,192.5ghc

Here’s a breakdown of the old and new system;.
Old system:
Product Gross Cost – GHS1,000
NHIL (2.5%1,000) – GHS25 GETFUND (2.5%1,000) – GHS25
Sub-total (1,000+25+25) – GHS1,050
VAT (12.5%*1,050) – GHS131.25
Total price to customer (1,050 + 131.25) – GHS1,181.20

New system:
Product Gross Cost – GHS1,000
NHIL (2.5%1,000) – GHS25 GETFUND (2.5%1,000) – GHS25
COVID-19 Levy (1% 1,000) – GHS10 Sub-total (1,000+25+25+10) – GHS1,060 VAT (12.5%1,060) – GHS132.50

Total price to customer (1,060 + 132.50) – GHS1,192.5
This means that the new effective compound standard VAT rate is 19.25% (192.5/1,000100), which is 1.125% more than the old effective rate of 18.125% (118.25/1,000100).

Also, the VAT Flat rate changes from 3% to 4%, with the increment being the 1% COVID Levy.

Just like NHIL and GETFUND, the COVID-19 Levy is non-recoverable, meaning GRA will not allow you to deduct it as an input.

Based on this, the importers and Exporters Association of Ghana, want Ghanaians to expect a marginal increment in goods imported into the country by its members, which will be onwardly transferred to the buyer.

The Association also commends suggestion by a former finance minister, Seth Tekper, for government to scrap the said 1% COVID-19 levy in the future when it manages to recoup monies expended during the pandemic.

It however wished the said suggestion could have been implemented by the erstwhile Mahama administration of which Mr Tekper was then the finance minister when it introduced the special tax recovery levy.

Signed…
Samson Asaki Awingobit
Executive Secretary,
024 357 5046

By: Rainbowradioonline.com

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