The VFRS is a special method of collecting and accounting for VAT/NHIL. It is designed for all VAT-registered retailers of taxable goods with an annual turnover of more than GHC200,000 but not exceeding GHC500,000. These registered taxpayers shall charge VAT/NHIL and COVID-19 HRL at a marginal rate of 4% on the value of their taxable sales.
The VFRS is an alternative to the standard VAT/NHIL, and COVID-19 HRL and a simplified method of accounting for VAT/NHIL and COVID-19 HRL. This means that VAT registered taxpayers who are exclusively retailers of taxable goods cannot operate the standard VAT Scheme.
The tax payable at a flat rate of 3% is equivalent in value to the effective tax payable by traders on the current invoice-credit scheme at a rate of 12.5% which employs the input-output mechanism.
Compute the relevant taxes payable
Taxable supply = 125,426.80
COVID-19 Levy = 125,426.8*1% = 1,254.27
VAT = 125,426.8*3% = 3,762.80 5,017.07
Note: The fuel sale is exempt sales while flat rate would be applied to the sales from the mart.
All VAT registered retailers of taxable goods with an annual turnover equal to or more than GHC200,000 but not exceeding GHC500,000 qualify to operate the VFRS.
NOTE: It is important to note that persons who are not registered by GRA to operate either the VFRS at 3% or the standard VAT scheme at 12.5% cannot by law charge VAT or the associated levies NHIL, GETFL, COVID-19 HRL.
The VFRS does not change the tax status of goods and services supplied. Goods and services specified as exempt supplies under the VAT Act 2013 (Act 870) as amended remain exempt. In the same way, the status of zero-rated and relief supplies remain unchanged. Therefore, a VFRS operator is not required to charge the tax on exempt items such as:
VFRS businesses and operators are required by the VAT law to issue the VAT/NHIL and COVID-19 HRL Flat Rate Scheme invoice for all transactions. However, businesses authorized by the Commissioner-General to operate the Special Retail Scheme could use electronic means to record their sales and issue till receipts for their sales. The till receipt will show the rate and amount charged for the VAT/NHIL/GETFL.