Importers not registered for VAT face 12.5% upfront tax

Importers not registered for tax face upfront payment of 12.5% of the custom value of the taxable goods as penalty.

It is a sanction imposed on importers of taxable goods who are required to register for Value Added Tax (VAT) but have failed to register.

The unregistered importers of goods become liable when they import taxable goods with custom value of GH₵‎200,000 and above per consignment

Commissioner–General of Ghana Revenue Authority (GRA) Rev. Dr. Ammishaddai Owusu-Amoah who announced this said the sanction takes effect from June 6, 2023.

VAT compliance has traditionally been a challenge due to the informal nature of transactions in the economy.

Some importers, though registrable for VAT purposes, are currently not in the VAT net.

Such importers, apart from paying import VAT at importation, do not charge the tax when they supply goods on the domestic front.

To ensure compliance, the VAT (Amendment) Act, 2022 (Act 1082) was enacted to impose an upfront payment of 12.5% on the customs value of taxable goods at all ports of entry, imported by persons who are required by law to register for VAT, in addition to import duties and taxes.

Such importers will, however, be allowed to recover these payments when they register and file their VAT returns subsequently, as required by Act 1082.

Rev. Dr Owusu-Amoah explained that the  upfront payment does not apply to imports of items imported for personal use or consumption by persons not required to register for VAT, imports not meant to be consumed in the country ( temporary import, free zones, transshipments, transit  cargo, ship-ship, exempt imports and relief imports and taxable uncustomed goods forfeited.

He described upfront payment as a compliance tool to encourage persons required to register for VAT to register and file tax returns

According to him, it is to discourage non-compliance by importers who are required to register and account for domestic VAT.

The Commissioner said the compliance tool is to bring uniformity to the treatment of taxable supplies made by VAT-registered taxpayers and non-compliant importers

To recover upfront payment, Rev. Dr Owusu-Amoah noted that the law provides that the upfront payment may be recovered after the person has registered for the tax and filed a return.

He stated that an application for recovery of the upfront payment should be submitted within six months after the date on which the upfront payment was made

Affected importers may visit the closest DTRD Taxpayer Service Centre near them to regularize their tax affairs before making an import or a declaration to Customs in order to avoid the sanction.

Importers who claim they are not liable to make the upfront Payment may apply to the Commissioner-General, stating the reason(s) in the ICUMS Single Window Portal for exclusion from the charge.