Ghana has moved four steps backwards in last year’s overall Doing Business ranking to 118 out of 190 economies accessed, the World Bank Doing Business Ranking report has shown. Overall, Ghana scored 60 marks, same score as last year in the Doing Business Report.
The report attributed the slip to some reforms that were made in how the VAT would be applied in 2019, a system which businesses find it “complicated and costly”.
In the 2019 budget, the GETFund and National Health Insurance Levy (NHIL), which were previously components of the 17.5 percent VAT, were converted into straight levies. The effect of this meant that, the 2.5 percent levy for the GETFund and the 2.5 percent NHIL would now be applied on the total value of a product and no more on the value added, a move which meant consumers and businesses will pay more.
It is this reform in the tax system that the World Bank said has made tax payment in Ghana complicated and costly, thereby, resulting in a significant drop of the ranking on Paying Taxes to 152 from 115 the previous year.
“Ghana made paying taxes more complicated and more costly by converting a portion of the recoverable value added tax into two new levies that are a cost to the firm: the Ghana Education Trust Fund and the National Health Insurance Levy,” the Doing Business report said.
Ghana scored 49.5 marks out of 100 in the Paying Taxes Indicators, lower than the Sub-Saharan average score of 54.7 marks, and placing the country 25th for this category in the region. Neighbouring Cote d’Ivoire, which placed 1st, scored of 64.8 marks in this category.
It is our hopes at Green Views that the Ghana government will address these issues for the economy to improve in next year’s Doing Business Ranking so that more business will come and invest in Ghana.