Ghana Banks to Charge VAT on Non-Lending Fees by End March

Ghana’s banks will begin charging value-added taxes on some services excluding loans by the end of next month, Ghana Association of Bankers Chief Executive Officer Daniel Mensah said.

The Ministry of Finance, Bank of Ghana and the country’s revenue agency are talking to banks and will identify the services to add the VAT by the middle of March, Mensah said in an interview in Accra, the capital, today. The levy will not be placed on lending, he said. The VAT on bank services will be 15 percent, he said.

“It’s going to make the cost of people getting financial services more expensive,” he said. “The areas they initially outlined for the tax to apply was virtually everything, that’s why we’re meeting with them to clarify and to agree.”

Ghanaian Finance Minister Seth Terkper raised the VAT on goods and services to 15 percent last year from 12.5 percent to boost revenue after falling gold and cocoa prices and rising government wages led the government to miss its budget deficit target.

“Essentially it will apply on areas that banks earn fees and commissions,” Benjamin Dzoboku, head of treasury at HFC Bank Ghana Ltd., said by phone today. “It will be fully borne by customers.”

Ghana cut the amount of fuel subsidies, raised utility prices and increased taxes last year to limit spending. About 70 percent of government revenue is used to pay for wages of public servants. Ghana recorded a budget deficit of 10.2 percent of gross domestic product in 2013, wider than the target of 9 percent. The target for this year is 8.5 percent of GDP.

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