The Value Added Tax (VAT) Service has said that the new Flat Rate Scheme (FRS) to be introduced for the informal sector would work well because it was drawing lots of lessons from the past.

Anthony Ackah-Mensah, Head of Training and Development Unit of the Service, said: "The best choice of all is for Ghana to get on board and transform the informal sector into a giant revenue making machine for national development."

Speaking at a day's workshop to sensitize the media on the new rate, Mr Ackah-Mensah said the FRS was not different from the Standard VAT because all provisions relating to suppliers under the Act shall apply appropriately.

This he said meant that all goods that were taxable under the current system would remain taxable while those exempted remained under the FRS but noted the flat rate had been simplified and made less cumbersome to the retailer.

He said FRS would be restricted to all retailers of goods who made business turnover of 100 million cedis per annum but whose annual turnover did not exceed 1.2 billion cedis per annum.

Retailers, who have registered to operate the standard VAT scheme but whose turnover did not exceed 1.2 billion per annum shall be brought under the FRS.

Mr Ackah-Mensah said the FRS would be operated at a single rate of three per cent, which was the effective tax rate of the retail sector on all taxable retail goods.

He said the three per cent was equivalent to the rate payable as tax by the targeted traders on the current standard VAT credit system which employed the input-output mechanism at 15 per cent.

Nii Ayi Ayittey, Assistant Commissioner of the Service, mentioned registration of qualified retailers; submission of returns; issuance of tax invoices; records keeping and pricing difficulties as some of the implementation challenges identified.

Source: GNA