The Ghana Revenue Authority (GRA) has dismissed media reports suggesting that its new Value Added Tax (VAT) collection system for digital services will attract an additional 20% tax on digital payments for services such as Netflix, Google, Amazon and other international digital platforms.
In a statement signed by the Public Affairs Department, the Authority clarified that the new system does not introduce a new tax or increase the existing VAT rate.
According to the GRA, the initiative is rather intended to improve the collection and accounting of taxes already applicable to digital services supplied by non-resident companies to consumers in Ghana.
For the avoidance of doubt, the Authority provided the following clarifications:
No new tax is being introduced: The GRA stressed that VAT on electronically supplied services by non-resident providers is an existing statutory obligation under Ghana’s VAT legislation. The new system is only an improvement in the mechanism for collecting taxes already due to the State.
No additional 20% charge: The applicable effective tax rate remains 20%, comprising 15% VAT, 2.5% National Health Insurance Levy (NHIL) and 2.5% Ghana Education Trust Fund (GETFund) Levy. The new system does not increase these rates.
Consumers already paying VAT should not be charged again: The Authority noted that approximately 92 non-resident digital service providers are currently registered and remitting VAT to the GRA. Where the applicable taxes are already included in subscription prices, the introduction of the new collection system will not result in an additional charge on the same transaction.
More providers to be brought into compliance: The GRA said it has identified approximately 100 additional non-resident digital service providers that are not currently charging and remitting the applicable taxes. These providers will be progressively brought into the tax net. Consumers using these services may therefore see the applicable statutory taxes reflected in their payments where they were previously not charged.
System applies to digital services, not physical goods: The Authority explained that the system covers qualifying electronically supplied services, including streaming, subscriptions, online advertising, and other services paid for through Ghana-issued payment instruments such as bank cards, mobile money and other digital payment platforms. Physical goods purchased from international e-commerce platforms remain subject to applicable Customs procedures.
The GRA further explained that the new system will improve transparency and accountability. Under the existing arrangement, the GRA relies largely on foreign digital service providers to declare their transactions and remit taxes.
The new system will enable the tax component of qualifying transactions to be identified and collected at the point of payment through participating financial institutions and payment service providers, improving compliance and ensuring revenue due to the State is properly accounted for.
The Authority assured the public that it will continue to engage banks, payment service providers and other stakeholders to ensure appropriate safeguards against duplicate collection and clear communication of applicable charges.
It encouraged members of the public who observe charges that appear inconsistent with the clarification to contact the Authority through its official channels for clarification and redress. Toll free: 0800-900-110.
“The introduction of a new tax must not be confused with improvements in the collection of an existing tax.
“The objective of the new system is to strengthen compliance, promote fairness between resident and non-resident service providers, and ensure that taxes already required by law are accurately collected and duly accounted for,” the statement said.
