GHANA TAXATION: OF VALENTINE’S DAY AND VAT…

Posted on February 14, 2011

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HAPPY VALENTINE’S DAY!

Now perhaps you may think madinghana is really living up to his name…what in heaven’s name do taxes have to do with Valentine’s Day?

This post has been in the works for a month or so. An expatriate aid worker working for one of the largest foreign funded organizations here in Ghana, switched hotels and showed me her “official receipt”, NOT A VAT RECEIPT, from the establishment she had left. The name of her organization was written at the top of the receipt for future follow-up……

Then, a week ago Sunday, I got dressed down by people checking out for adding the VAT onto our DISPLAYED/PUBLISHED/VERBALLY COMMUNICATED rate-all of course detailed on the embossed government VAT receipt.

It’s not important the name of the hotel the aid worker was dissatisfied with (see follow-up at the end of the post); nor is it important who challenged Four Villages Inn at checkout , but I will tell you what my response was…

“You, the customer, pays the VAT…not me. I am charged by the Ghana VAT Service to collect the 15% VAT, NOT PAY IT. In your home country and mine, that’s the way it is, at least for hotel and restaurant services and most of the retail trade…and look what tax revenues have done for schools, hospitals, roads etc. in those countries. Why not the same here?

Here at Four Villages Inn we care passionately about national development and want to use our revenues to add value to your experience while maintaining our quality, not pay your taxes. We have so many other taxes and fees to pay.”

Commentary:

Many years ago, the Ashanti Region Branch of the Ghana Hotels Association invited VAT Service personnel to a regular monthly meeting. I brought up the idea that all establishments should be required to quote their rates VAT EXCLUSIVE. I made the arguments above only to receive the response from the ranking VAT official, ‘THIS IS GHANA.’

Gawd. I hate that saying. Sometimes I’ll say there is nothing wrong with Ghana. The problem is the people in authority often not taking decisions or action. But at the time, I suggested the VAT Service carry out a pilot study in one area for a stipulated time period. Maybe for one month, all establishments in a locality would include the VAT and then the next month exclude the VAT. Then the VAT service could compare the data….and take some action in the best interest of the nation.

Or perhaps another study might involve the VAT Service canvassing establishments asking whether they include VAT or exclude it. The VAT service would have to take into consideration star rating/number of rooms and rate. A comparative study could be undertaken to see which scenario generates more revenue for the state.

One thing I know is a VAT inclusive society would result in a friendlier VAT Service. Of all the revenue collecting agencies discussed at our Ghana Hotels Association meetings, it is with the VAT Service that members express the most hassles ….no wonder when so much suspicion exists prompted by the issuance of “Official Receipts”.

Enough, now for the Valentine part of the post. When the eight guests of Four Villages Inn (four doubles-a FULL HOUSE) sat down to breakfast today, there was a Ghanaian Golden Tree chocolate bar to start their 2011 Valentine’s Day. When they leave on Wednesday, no worry, they are paying the VAT and madinghana can focus solely on enhancing, no matter how small, the quality of their experience.

Valentine's chocolate @ FOUR VILLAGES INN


MY FELLOW HOTELIERS
: you love-that ole Valentine word- this country…and your own establishment, let your customers pay the VAT, NOT YOU.

GHANA VAT SERVICE: Study and act….

Follow up: That hotel that issued their own official receipt to that aid worker was being considered to host a conference for that aid organization. I HEARD THAT THE CONFERENCE WAS HELD AT ANOTHER KUMASI HOTEL!

P.S. And lastly, don’t get me wrong, most hoteliers who include the VAT in their hotel rates, do pay the VAT themselves, but should they? And, of course, they do love GHANA and want a BETTER GHANA!

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