Value Added Tax Administration in the Construction Industry in Ghana

Value Added Tax Administration In The Construction Industry In Ghana

Dadson Awunyo-Vitor Department of Agricultural Economics and Agribusiness, Kwame Nkru- mah University of Science and Technology, Ghana

Address for correspondence:- [email protected]

Journal of Finance and Management in Public Services. Volume 14. Number 2 Abstract The objective of the study is to assess the level of awareness of contractors and consultants within the construction industry about Value Added Tax (VAT) and challenges of its administration or implementations within the industry. Data was collected from 52 contractors and 8 consultants in Brong Ahafo Region of Ghana using questionnaires. Descriptive statistics were used to analyse the data. The study revealed that a large proportion (75%) of the respondents were aware of the need to register and charge Value Added Tax as a result of sensitisation workshops organised by Ghana Revenue Authority in the region. The consultants perceive the implementation of the Value Added Tax as important in national development, however, they see the registration process as cumbersome. Contractors also had a good perception about Value Added Tax implementation within the construction industry but believed that they need more education about the modalities of registration and payment. The study further revealed that the state lost GH¢ 8,053,407.52 ($5,033,379.70) in the 2012 fiscal year due to non-compliance with Value Added Tax by contractors and consultants in the region. In order to improve the implementation of Value Added Tax within the construction industry Ghana Revenue Authority must intensify education of contractors on modalities of registration and payment. In addition issuance of the tax identification number should be decentralised in order to facilitate registration and eliminate unnecessary bureaucracy. The Registrar Generals’ Department should also encourage contractors to register for Value Added Tax upon registration of their company. Sanctions for non-registration and compliance of Value Added Tax should be actively enforced.

Key words: Value Added Tax, Construction Industry, Brong Ahafo, Ghana Revenue Authority

Introduction The generation of income through tax is essential for every nation’s development. Tax revenue provides funds to support government business in all nations. Silvani and Baer (1997) noted that most African states are always in deficit with respect to their budget because about 60% of potential tax in these countries goes untapped. As a result, most of the countries in Africa have to depend on donor funds to support their budget (World Bank, 2005). However, with dwindling donor funds there is the need for an effective tax administration system. According to Hadler (2000) African countries can increase their tax revenue by 30% through efficient tax administrative systems. Therefore, most African states, including Ghana, are making considerable effort to expand the tax net and also improve tax administration systems. An example in 1998 was the introduction of Value Added Tax in order to expand the tax net and improve tax revenue to support the business of government. Value Added Tax was established by VAT Act which replaced the sales tax legislation that was deemed to be too narrow in generating the needed revenue. The contribution of VAT to government revenue over the years has seen a steady increase from 5% to 18%. The introduction of VAT was a very controversial issue. The tax was introduced in 1995 but had to be repealed because of implementation challenges. These challenges included inadequate education of the public about VAT system [Osei, (2000)]. VAT rate of 17.5% was deemed too high because the sales tax rate which VAT replaced was 15% [Gray et al., (2001)].

After the draft act was tabled, Parliament set the bill aside and requested that VAT management team engage in a national education campaign to sensitise the population to the objective of the tax. This is because the education which took place between May and November 1994 was virtually ineffective because it lacked precision and the legal backing to

Journal of Finance and Management in Public Services. Volume 14. Number 2 prompt any serious interest among the general public. This has resulted in a delay in adop- tion of VAT legislation and regulation by parliament which adversely affected the preparation for the introduction of VAT. In addition the lack of precision on VAT rate did not give business enough time to evaluate the effect of the new tax on the prices of their goods and services Also, the Ministry of Finance and Economic planning was not able to stick to the anticipated goods and services which would attract VAT. Furthermore, tax payers argued that the tax applied to a wider range of products and services compared to repealed sales tax. The above issues lead to civil unrest; consequently the Parliament passed two bills to stop the implementation of VAT in June 1995 (World Bank, 2001; Osei, 2000). The sales tax was reintroduced with the same rate, scope, and coverage as before. The government reintroduced VAT at the end of 1998 as part of the Public Financial Man- agement Reform Program, and with technical assistance from the U.K. Department for International Development. This time VAT rate was lowered from 15% as indicated in the bill to 10% after extensive consultations between Parliament and the executive branch.

Though the lower rate made revenue lower it increased public acceptance of the tax. Even with the lower rate, revenue from VAT exceeded the targets set for the initial phase of its operation. It also generated 20% more revenue than the sales tax it replaced. The government’s macroeconomic framework which aims to reduce trade taxes and gradually replace them with broad based taxes such as VAT had seen increases in the role of VAT in the revenue system over the years - less than two years after VAT was reintroduced, its rate was raised to 12.5%.

The government further broadened the tax base by cutting the registration threshold from 200 million to 100 million cedi.The flat rate scheme was also introduced to encourage small and medium scale enterprises (SMEs) to register and charge VAT on their goods and services. This scheme is open to only retailers and SMEs whose average annual turnover is below GH¢120,000. This scheme attracts a 3% flat rate on goods and services.

Since its inception the laws governing VAT placed an emphasis on goods and services and not on construction; meanwhile those in the construction industry are capable of receiving huge sums of monies as profit from central government, being the main client, upon com- pletion of their projects. However, those businesses who supply goods and services (such as petty traders, retailers, other contractors) to government institutions and consultants are being asked to pay their VAT returns to the Domestic Tax Revenue Division of the Ghana Revenue Authority by the middle of every month based on their revenue generation.

In order to broaden the tax base, reduce deficits and reduce over reliance on donor funds, the national budget requires an improvement in revenue generation through taxation. This calls for the expansion of the tax net and an efficient and effective tax administration system; consequently tax reforms are needed to achieve the above goals. Hence additional businesses have been included in the schedule to attract VAT, and one such business type is works contracts.

This came into being as a result of the enactment of VAT Amendment Act 2002 (Act 629), section 16(c) of Schedule 1 of VAT Act 1998(Act 546). In view of the above law [VAT Amend- ment Act 2002 (Act 629),] with effect from 1st January, 2012 works contracts are to attract Value Added Tax (VAT) and the National Health Insurance Levy (NHIL), pursuant to VAT Amendment Act, 2002 (Act 629). Therefore all contractors are to be registered to enable

Journal of Finance and Management in Public Services. Volume 14. Number 2 them to submit returns to the Domestic Tax Revenue Division of the Ghana Revenue Au- thority.

This means that Client/Users are to pay VAT and NHIL on works since the value has been added to the material, equipment and labour inputs which constitute the components from which the work is obtained as a finished product. Under this amendment, items which attract Value Added Tax in the construction industry include demolition, maintenance work on building and roads as well as all costs associated with the construction of both roads and buildings. Examples of other taxable items within the construction industry include: installation of electrical fixtures; air-conditioners; communication equipment; sprinklers; safety equipment; aluminum glazing; provision of landscaping services; main works and roofing etc. Though the construction industry is very wide and made up of many parties, the parties can be grouped into three broad groups: contractors (building contractors, road contractors and sub-contractors), consultants, and clients.

The introduction of VAT in the construction industry is one of the reforms which aimed at expanding the tax net and improving government revenue. However, the implementation not yielded the desired results as most of the contractors and consultants within the industry are not registered for VAT (Sowa (2010). Hence there is the need to understand the implementation challenges of the tax in the construction industry in order to formulate poli- cies to improve the registration and VAT payment by the actors within the industry. Thus this study aimed at evaluating the implementation of Value Added Tax on the construction industry in Ghana using the Brong Ahafo Region as a case study. Brong Ahafo Region was selected because of access to data and information. The consultants and contractors have regional and national associations and it is the Brong Ahafo regional association that has agreed to participate in this study.

Related Literature

Concept of Taxation Taxation is defined as “the levying of compulsory contributions by public authorities having tax jurisdiction, to defray the cost of their activities” (Ali-Nakyea, 2008.) No specific reward is earned by the tax payer; the money collected is used by the government for the production and payment of goods and services, provision of infrastructure and maintenance of law and order. Agyeman (2005) also defines taxation as “the demand by the central or local government for a compulsory payment of money by citizens of a country other than as payment for some specific service or as a penalty for some specific offence”. Other benefits of taxation are to decrease inequalities arising from the distribution of wealth, to restrain certain types of consumption (for example, alcoholic beverages and cigarettes), to protect home industries, and to control certain aspects of the country’s economy.

Tax administration in Ghana has gone through a number of reforms like all other economies in which it is applied. Tax administration in developing countries has, however, not been effective due to some challenges it poses. According to Tanzi and Zee (2000), institutional sustainability of an effective and efficient tax system in developing countries is not an easy task as it faces several challenges. These challenges include the structure of the economy, limited capacity of the tax administration, the poor quality of basic data, and the political set up.

Journal of Finance and Management in Public Services. Volume 14. Number 2 Taxation administration in Ghana Ghana has seen several tax administration instruments, ordinances and laws over the years. In 1855, the colonial masters passed the first customs law which was replaced in 1878 by a customer law which was developed in line with the United Kingdom’s Customs Law. In 1943, income tax was introduced by the Income Tax Ordinance. Until 1998 the two institutions which were in charge of tax administration in Ghana were the Internal Revenue Service (IRS) and Custom Excise and Preventive Services. In 1998 the Value Added Tax Service was added as the third institution for tax administration in Ghana.

The Internal Revenue Service and Customs Excise and Preventive Services were part of the civil service until 1986. In 1986, PNDC Law 143 and PNDC Law 144 granted these institution full operational autonomy and partial financial autonomy by abolishing the Revenue De- partment of the Ministry of Finance and establishing the National Revenue Secretariat. The objective of the National Revenue Secretariat is to strengthen tax administration in Ghana (Devas, 2001). The function of the Revenue Department of the Ministry of Finance was taken over by the National Revenue Secretariat, and the Internal Revenue Service and Custom Excise and Preventive Service was placed under the National Revenue Secretariat (Terkper, 1999; Osei, 2000)

In 1998 the National Revenue Secretariat was abolished and replaced by the Revenue Agen- cies Governing Board. The Revenue Agencies Governing Board (RAGB) was established by an Act of Parliament that also increased the autonomy of the Internal Revenue Service, Cus- tom Excise and Preventive Service and Value Added Tax Service. Though the three agencies were overseen by the RAGB they operated independently of each other, and consequently there was a duplication of services which increased operational costs hence the need to create one integrated body (Terkper, 1999). However, constitutional requirements stood in the way of creating one integrated, stand-alone revenue authority until 1998 when the Ghana Revenue Authority (GRA) was established (Terkper, 1999; Atuguba, 2006). The Ghana Revenue Authority comprises of two main divisions which oversee direct and indirect tax in Ghana. These divisions are the Domestic Tax Division, which is made up of the Internal Revenue Service and the Value Added Tax Service, and the Customs Division which is made up of Customs Excise and Preventive Service.

Value Added Tax is a tax levied on the added value of a commodity and or services at various stages of production of the good or rendering of the services. It is levied on the value added along different stages of production and distribution of a commodity or service. In this sense, it is equivalent to a retail sales tax which would be collected only at the retail stage (Shome and Spahn, 1996). The term “Value Added” according to VAT Act, 1994 (Act 486) of Ghana refers to an increase in the value of goods and services at each stage of production or transfer of goods and services. The tax is paid by the final consumer of the goods and services. It is collected by the registered person at various stages of the production and distribution process or services rendering process.

A tax credit is granted at every stage for tax paid in the chain of transfer or sale of goods and services until it reaches the final consumer. Goods and services of a Value Added Tax Registered person attract VAT. The tax is charged on the sales value of goods and services of a registered person (Crawford et al., (2010). According to Pritchard (2009) “VAT is a tax on consumers and is levied on the supplies of goods and services made by a taxable person in

Journal of Finance and Management in Public Services. Volume 14. Number 2 the course of furtherance of a business carried by him”. VAT Regulations (Legislative Instru- ment No.1598) were passed in Ghana by Parliament in February 1995. The instruments actu- ally became effective in March 1995 after a 21-day statutory notification period.

The introduction of VAT became necessary in order to remedy the deficiencies in the tax system in Ghana. These deficiencies included a narrow tax base which excluded sectors of the economy, hence low reliance and unstable tax revenue and revenue leakages as a result of weak tax collection system with inadequate checks and controls. For example, taxes on domestic consumption in Ghana were generally imposed at the importation and manufac- turing stage of production, and not extended through the retail stages. In addition the sales tax was levied on goods albeit with numerous exemptions by the customs administration.

In preparation for the introduction of VAT, the government created a new agency to be responsible for the collection of the new tax, the VAT Service. VAT Service recruited and trained staff and developed a computerised information system to administer the tax. The service was responsible for education, registration and collection of VAT. The VAT service was merged with the Internal Revenue Service to form the Domestic tax division with the establishment of the Ghana Revenue Authority (GRA) by an Act of Parliament, Act 2009 (Act 791).

The Construction Industry and Value Added Tax The construction industry is very wide and made up of many parties. However, it can be said that the construction industry comprises two main parties: contractors (building contractors, road contractors and sub-contractors) and clients. The construction industry is governed by contracts which specify the terms and conditions agreed between the parties. In the construction industry, the contractor can be said to be the supplier and the client, the buyer. This is because in contractual terms, the client pays the contractor a sum of money in consideration of work done. This equates to the contractor selling the work done as goods to the client who pays for the cost of the completed work as if it were goods bought.

The construction industry is very important in the economic development of Ghana. It sup- ports job creation and employs both skilled and unskilled labour. For example employment can be generated in the construction industry through physical infrastructural development. It also provides the needed infrastructure for other economic activities to take place. It is well known that an active construction industry adds to growth of the economy. Before the contractor can execute the work for the client he needs to the purchase materials, hire equipment and hire labour. This is where the input tax comes in with respect to construction work to be done. The contractor is expected to charge a standard rate of 15%; which comprises 12.5% Value Added Tax and 2.5% National Health Insurance Levy.

However, the law has largely been overlooked by a large proportion of the contractors and consultants within the industry with only a few contractors and consultants charging VAT, and the large majority yet to charge VAT. Sowa (2010) attributed the non-compliance with the law by parties in the construction industry to implementation challenges. This argument as emphasised by Blankson (2010) who noted that there is the need for GRA to interact with the affected groups and individuals in the construction industry to identify the implementation challenges of VAT and ensure proper understanding of issues. This would help the authority to develop appropriate methodology including modalities and

Journal of Finance and Management in Public Services. Volume 14. Number 2 procedures for application of VAT within the construction industry in Ghana. A successful implementation of VAT within the construction industry would not only improve revenue for the country but it would also encourage other professionals such as lawyers, doctors and accountants to pay tax.

Methodology

Sources of Data The data for the study was predominantly primary data collected from contractors and consultants who have registered their business with the Registrar General and are operating in the Brong Ahafo Region of Ghana. In all there were 60 registered contractors and eight registered consultants within the region. In the case of the consultants, all them were interviewed due to their small number. However,. in the case of the contractors the sample size was determined by using an estimation method given by Bartlett et al. (2001).

n = N/1 + N(e)2

Where n is the sample size; e = error level; e = 1 – confidence level; and N is the total population of registered contractors.

Assuming 95% confidence level, e = 0.05 and an estimated 60 registered within the study area as provided by the regional office of the Contractors Association, a sample size of 52 registered contractors were sampled for the study. The sample size for this research is 52 contractors and 8 consultants. A simple random sampling technique was used to select the respondent consultants. Questionnaire and interview guides were the main data collection instrument used. Ques- tionnaires were administered to sampled contractors and the consultants. In addition man- agers of these firms were also interviewed using interview guides.

Analytical Framework Descriptive statistics such as frequency tables and percentages were used to present the socio–economic characteristics of respondents and their levels of awareness of Value Added Tax Law. The Chi-square test was used to assess if there was an association between educational level and VAT registration among the respondents. Kendall’s Coefficient of Concordance (W) analysis was used to rank the items identified as constraints to the implementation of Value Added Tax by the respondents. The degree of agreement of the rankings by the contractors and consultants was then measured. W ranges from 0 to 1. In deriving W, let T represent the sum of ranks for each constraint being ranked. The variance of the sum of ranks is given by:

[1]....

.... Where Var denotes variance and n denotes the number of constraints. The maximum variance of is given by

Journal of Finance and Management in Public Services. Volume 14. Number 2

[2]......

Where is the number of respondents. The formula for Kendall’s coefficient of concordance is given by

[3]......

By simplifying equation 3 above result in the computational formula for as:

[4]......

In this study, n includes elements like cumbersome procedure, lack of tax personnel, lack of understanding of the process, lack of education on the VAT process, bureaucratic procedures, and ignorance of VAT law. The hypotheses are that for the null hypothesis: (H0): there is no agreement between the rankings of the constraints identified by the respondents, and the alternative hypothesis (H1): there is agreement between the rankings of the constraints identified by the respondents. The hypothesis was tested for significance in terms of the F distribution. Chi-square statistics were also used to test independence between VAT registration and educational levels of the respondents and age of businesses respectively. The value of the test-statistic was determined as follows:

[5]......

Where X2 = Pearson test statistics

Oi= Observed frequency

Ei= Expected frequency n = Number of cell in the table

The p-value was then used to assess if a significant relationship exists between these vari- ables and VAT registration.

Results and Discussion

Demographic Characteristics of Respondents The study revealed that the majority of the sample population for contractors were above

Journal of Finance and Management in Public Services. Volume 14. Number 2 42 years of age whilst half the numbers of the sample population for consultants were between 37-42 years. Respondents from consulting firms were the youngest in the sample study.

All the consultants had tertiary school education as against 44% of the contractors. 12% of the contractors completed Junior High School. This implies that for one to be in a consul- tancy firm, he or she must have acquired a certain amount of education whilst the contractors mostly needed the required skills and knowledge. Almost all respondents were married except for 4% of the contractors who were single.

Table 1: Socio-Economic Characteristics of the Respondents Contractors Consultants Frequency %age Frequency %age Age 25-30 years 0 0 0 25 31-36 years 12 24 2 25 37-42 years 2 4 4 50 Above 42 Years 37 72 2 25 Total 52 100 8 100 Educational Junior high school 12 0 level 6 0 Senior High school 23 44 0 0 Tertiary Institution 23 44 8 100 Total 52 100 8 100 Gender Female 0 0 0 5 Male 52 100 8 95 Total 52 100 8 100 Marital Status Single 2 4 0 0 Married 50 96 8 100 Total 52 100 8 100

Source: Field data, 2013

In all, 56% of the construction firms were registered as a sole proprietorship company while 44% were registered as a limited liability company. Most of these contractors have had considerable experience in the business. 80% of them have been in operation for more than 5 years. Only 20% of them have had between 1-5 years’ experience in operation. Most of the respondents are currently operating more than two sites. These contractors composed of 19 road contractors, 35 building contractors, and 2 were into both road and building construction. Classification of contractors in the construction industry is shown in Table 2 below.

Table 2: Type of Licence Held by the Respondents’ Organisations Class of licence Frequency %age Building Contractors D1K1 9 25 D2K2 13 37.5 D3,K3 13 37.5 Road Contractors A1B1 4 22.2 A3,B3 13 66.7 A4,B4 2 11.1

Source: Field data, 2013

Some of the respondents indicated that there are laws governing VAT compliance in the construction industry. This law differs from those applied in other businesses in that the

Journal of Finance and Management in Public Services. Volume 14. Number 2 Construction Levy Act 629 of 2002 amended Act 546 of 1998 which governs VAT and NHIL now included the construction industry, therefore this amendment made construction taxable.

Figure 1: Respondents Level of Awareness of VAT

Source: Field data, 2013

Figure 1 above shows that all the consultants were aware of VAT law in the construction industry, 87.5% of the consultants indicated that they became aware of VAT law in the industry through Ghana Revenue Authority; and 12.5% became aware through other professional bodies. This is an indication that awareness of the law among consultants is very high. On other hand, 60% of the contractors were aware of the registration of VAT, whilst 40% indicated they were not. Those who were aware indicated that they became aware through consultants, Ghana Revenue Authority and contractors’ associations. More than half the sample population confirmed their awareness of VAT in the construction industry.

Despite the high level of awareness of the respondents about VAT, the study revealed that 72% of the contractors had not registered with VAT because of lack of education and bad collection systems. This was confirmed by the fact that 92% of the respondents indicated their company have not been offered any training on the registration and modalities for VAT. Although the regional office of the Ghana Revenue Authority is responsible for ensur- ing the implementation of VAT in the construction industry, the Tax Identification Number (TIN) is issued in Accra. This is making their work difficult as they cannot track those who have registered and those that have not registered.

Constraints Associated with the Implementation of Value Added Tax among Contractors in the Construction Industry

The study identified three main constraints which influence the implementation of VAT within the construction industry in Ghana. These are a lack of appropriate education on

Journal of Finance and Management in Public Services. Volume 14. Number 2 VAT by the tax authorities; bureaucratic procedure in registering for VAT and accessing registration certificates, as well as procedures used to collect VAT from those who have registered for VAT. The respondents were asked to rank these constraints and the result of the ranking is presented in Table 3. The tests of significance in terms of F distribution of the degree of agreement or concordance (W) between the rankings of the constraints to VAT implementation within the construction industry in Ghana is fairly high, with above 60% degrees of agreement between the rankings of the respondents. The study revealed that the most important constraint in implementation of VAT in the construction industry is the lack of education, followed by bureaucratic procedures. The least important constraint was poor collection systems.

Table 3: Ranking of constraints identified by the respondents in the implementation of VAT

Influencing factors (Constraints) Ranking Lack of education 1 Bureaucratic procedure 2 Bad Collection systems 3 Number of respondents 60 Coefficient of Concordance (W) 0.6375 (63.75%)

Source: Field data, 2013

This explains why respondents were requesting education on the modalities for VAT, and could be a large part of their reasons for non-registration and non-compliance. Due to the constraints associated with the implementation and compliance of VAT law in the construction industry, the study has revealed the amount lost by the state as these firms failed to comply with VAT on the contracts awarded. These are summarised in the Table 4.

Table 4: Estimated sum of VAT unaccounted across selected districts in 2013 Districts Contract Sum VAT(GH¢) Sunyani West District 1,033,282.90 13,477,603 Techiman Municipal 1,651,247.74 21,538,014 Kintampo Municipal 827,038.54 10,787,459 Jaman South 868,253.83 11,325,050 Nkoranza South Municipal 882,995.36 11,517,331 Total 5,262,818.37 68,645,457 Estimated sum of VAT unaccounted for across selected districts Consultant Contract Sum VAT(GH¢) A 27,130,064.85 3,538,703.9 B 2,515,872.16 328,157.24 C 9,882,718.77 1,289,050.30 Total 16,951,317.39 2,211,041.40

Source: Consultant Contract Document, 2013 Exchange rate as at December 2013: GH¢ 3.88=£1.00; GH¢ 2.3325=US$1

The state has lost a total amount of GH¢ 70,856,498.40 ($ 35,606,281 or £18,261,984.12 as at December 2013) because of Consultants’ non-compliance with VAT on the projects awarded

Journal of Finance and Management in Public Services. Volume 14. Number 2 in 2012.

Dependency between VAT Registration and Educational Level of Respondents and Age of Business The results of the test of hypothesis are presented in Table 5. The Chi-square test of dependency between educational levels of the respondents and VAT registration showed Pearson Chi-square value of 0.048 with a p-value of 0.976. As the p-value is greater than 0.05, we therefore fail to reject the null hypothesis. This indicates that there is no significant relationship between educational level of the owners of the firms and registration for VAT. This means that VAT registration is independent of the educational level of the owners of the firm. Thus for owners of construction firm to decide whether or not to register to implement VAT does not depend on their educational level.

Table 5: Dependency of VAT registration on educational level of the respondents Registered for VAT Attributes Chi-Square Value P-Value Yes NO Educational level Junior high school 2 4 0.048 0.976 Senior High school 6 16 Tertiary Institution 9 23 Age of Business Less than 10 years 30 12 2.170 0.538 Above 10 years 13 5

Source: Field data, 2013

In order to test the dependency between VAT registration and age of the firm’s structure, Chi-Square test was conducted. The test result showed a Chi-Square value of 2.170 and a p-value of (0.538) for age of the firm (Table 5). Since the p-values are greater than 0.05, the test fails to reject the null hypothesis, and indicates that VAT registration is independent of the age of the firm.

Conclusion and Recommendation The study revealed that awareness of Value Added Tax among contractors and consultants was high. The level of awareness of VAT among the respondents was created by the Ghana Revenue Authority and other professional bodies. However; they need more education about the modalities of VAT to increase compliance in the construction industry in Ghana. Despite the level of awareness of the respondents about VAT, a large proportion has not registered for VAT because of lack of education and bad collection systems. This is the major reason why most of them cited lack of education as the major constraint to VAT registration. Thus the staff of Ghana Revenue Authority should be equipped through training programmes to be conversant with the amendment of VAT Act for effective administration of the tax law. They should also intensify their education on VAT in the construction industry since respondents have high awareness but lack of education on the basic principles and modalities for VAT. This would be most successful if the staff of GRA were taken through regular training programmes on emerging issues within the sector they are operating.

The Ministry of Finance and Economic Planning should collaborate with the Ministry of Housing and Road and Transport to ensure that state owned consulting firms in the region

Journal of Finance and Management in Public Services. Volume 14. Number 2 implement VAT law applicable to the construction industry. Also Value Added certificates should be part of the tender requirements to ensure that contractors register before com- peting for any contract works within public institutions as it is being required from suppli- ers. The Ghana Revenue Authority must collaborate with the Registrar General’s Depart- ment so that as soon as the contractor registers a company a VAT taxpayer identification number is issued. In the case of existing firms, information centres should be established within the regions to facilitate the process of acquiring VAT certificates for those without VAT registration numbers. Because the fact that the Ghana Revenue Authority has only one Tax Identification Number (TIN) centre that is located in Accra, this makes the whole process cumbersome and as a consequence substantial delays are occurring in the system.

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