Construction to attract VAT, NHIL

CONSTRUCTION works will next year attract Value Added Tax (VAT) and National Health Insurance Levy (NHIL).
The Ghana Revenue Authority (GRA) and the Ghana Institute of Surveyors (GhIS) have, therefore, begun a series of educational programmes to bring to the notice of the public and especially contractors, consultants, employers, clients and other stakeholders in the construction industry the need to comply.
At a press conference held in Accra yesterday, the President of the GhIS, Ms Yvonne Sowah, said the educational programmes had become necessary because even though the amended VAT Law, Act 629 of 2002, required that works contract attracted VAT and NHIL, that had largely been overlooked.
She said non-compliance with the law had occurred among parties in the construction industry in Ghana because of implementation challenges which had brought in the GhIS and other stakeholders to address.
She noted that before applying the remedies for non-compliance, the GRA thought it prudent to fine-tune the guidelines and develop methodology, which included the modalities and procedures for the application of VAT in the construction industry in the country.
“Furthermore, the GhIS intends to use this forum to inform the general public that beginning from 2011, the GRA shall apply the necessary sanctions for non-compliance with the application of VAT to construction in accordance with the amended VAT Law, Act 629 of 2002,” she stated.
The Commissioner General of the GRA, Mr George Blankson, said authority had made it a point to interact with the affected groups and individuals in the construction industry to ensure that proper understanding of the issue was achieved.
He explained that tax from the sector would help in developing the nation and, therefore, asked those affected to comply.
Mr Blankson said the application of the tax was not new, since it was introduced in 2002, adding that some contractors had already started paying.
He said if fully implemented, it would broaden the country’s tax base and ensure that tax levels became tolerable and manageable for all taxpayers.
The GRA Commissioner indicated that the payment of VAT and NHIL on construction works by contractors would encourage other professionals such as lawyers, doctors and accountants to emulate the practice.