Many have heard about the Valued Added Tax (VAT) system in Ghana. While some have an appreciable knowledge of what it is, others have little or no knowledge about it.
Registration for VAT and other related matters are very crucial when it comes to VAT and therefore the need for businesses and individuals alike to have good knowledge about this arises.
In this article, I present a highlight of what I call “basic knowledge about VAT registration”. The article will consider such areas as whether or not a business should register for VAT, what is required for the VAT registration, notice of registration and certificate for registration. It will also consider other related areas.
Registration requirement
There are two types of registration:
- Compulsory – this is where a person (individual or business) engages in activities that are subject to VAT (taxable activities) and meets a turnover threshold of more than GHC200, 000 for a 12-month period or less or there is reasonable grounds that within a 12-month period or less it will make a turnover of more than GHC200, 000. Such a business must register for VAT.
- Voluntary – this occurs where a person wishes to register and there is no obligation on its part to register.
Other registration requirements include:
- obtain a Taxpayer Identification Number (TIN)
- fill VAT registration form
- attach copies of Business Registration documents
- submit registration forms at the nearest Domestic Tax Revenue Division office
Form and manner required
The VAT Act indicates that registration cannot be done in any manner at all but in the manner and form that the Commissioner-General prescribes. Advice should be sought about this.
Duration for registration
Application for registration must be done within 30 days after the end of the period for which the turnover threshold is achieved.
Time of start of obligation
The obligation to register for VAT starts from the beginning of the tax period immediately following the tax period in which the duty to apply for registration arose. For example, if the duty for ABC Ltd to register for VAT arose in 2018 tax period, ABC Ltd must register for VAT from the beginning of 2019 tax period.
Notice of registration
An applicant shall receive a notice indicating a go-ahead or a decline to register within 30 days after applying to register. If no notice is given, applicant should interpret that as an approval of application except where it is indicated that the applicant is not eligible.
Certificate of registration
Every person that registers for VAT shall be issued with a certificate. It is expected that this certificate is displayed at the principal place of business and any other place that a taxable activity is undertaken by the person.
Other related matters
VAT registration can be done at any tax office, it comes with no cost and failure to register means suffering penalty of up to 2 times the amount payable from the time registration should have been done.
Staying tax compliant must be of great concern for every business. VAT registration comes with benefits which far exceeds any associated costs. Businesses and other tax persons are therefore encouraged to register for VAT and comply with all VAT rules.
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