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SMEs Record Keeping in Ghana: Has VAT Made It Better?

Author

Listed:
  • Philip Kofi Adom

    (Department of Economics, University of Ghana, Ghana.)

  • Kwaku Amakye

    (Department of Banking and Finance, University of Professional Studies, Accra, Ghana.)

  • Edinam Doh

    (Business School, University of Ghana, City Campus, Ghana.)

  • Regina Anku

    (Business School, University of Ghana, City Campus, Ghana.)

Abstract

With the introduction of the VAT Flat Rate Scheme, which brings on-board traders on whom the VAT record-keeping requirements would or might prove burdensome, concerns arise on the potential impact of the VAT record keeping requirement' on SME's record keeping. The focus of this study was to investigate the effect of the record-based controls of VAT on firms' record keeping skills and accounting system based on a sample of 250 SME's selected from five key trading centres in the Accra metropolis. The result showed that completion of the VAT monthly return form imposes more cost on traders than the VAT invoice book. Firms who receive education from VAT officials are found to be 0.102 more likely to complete the VAT monthly return form than firms who do not receive education from VAT officials. Also, firms who receive education from VAT officials are 0.849 times as likely as those firms who had not received education from VAT officials to complete the VAT invoice book by self. Generally the result showed that the record-based controls of VAT' has significantly improved SME's record keeping skills and accounting system albeit it is found to be stringent relative to other record keeping types kept by SME's.

Suggested Citation

  • Philip Kofi Adom & Kwaku Amakye & Edinam Doh & Regina Anku, 2014. "SMEs Record Keeping in Ghana: Has VAT Made It Better?," International Journal of Economics and Financial Issues, Econjournals, vol. 4(1), pages 152-169.
  • Handle: RePEc:eco:journ1:2014-01-15
    as

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    References listed on IDEAS

    as
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    2. Mr. Stephan Danninger & Ms. Alina Carare, 2008. "Inflation Smoothing and the Modest Effect of VAT in Germany," IMF Working Papers 2008/175, International Monetary Fund.
    3. Martin S. Feldstein & Paul R. Krugman, 1990. "International Trade Effects of Value-Added Taxation," NBER Chapters, in: Taxation in the Global Economy, pages 263-282, National Bureau of Economic Research, Inc.
    4. Michaelas, Nicos & Chittenden, Francis & Poutziouris, Panikkos, 1999. "Financial Policy and Capital Structure Choice in U.K. SMEs: Empirical Evidence from Company Panel Data," Small Business Economics, Springer, vol. 12(2), pages 113-130, March.
    5. Burgess, Robin & Stern, Nicholas, 1993. "Taxation and Development," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 762-830, June.
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    Cited by:

    1. Daniel Agyapong & Albert Bampo Attram, 2019. "Effect of owner-manager’s financial literacy on the performance of SMEs in the Cape Coast Metropolis in Ghana," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-13, December.

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    More about this item

    Keywords

    Record-based control of VAT; SMEs; Ghana; Survey research design;
    All these keywords.

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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