GRA Clarifies New Digital VAT Collection System Will Not Introduce Additional 20% Tax
The Ghana Revenue Authority (GRA) has clarified that the introduction of a new digital Value Added Tax (VAT) collection system will not result in an additional 20 per cent tax on subscriptions and payments for digital services such as Netflix, Google, Amazon and other international digital platforms.
According to the Authority, recent media reports and public discussions suggesting that the new system would impose an extra 20 per cent tax on digital services are inaccurate. The GRA explained that the system is intended to enhance the collection and accounting of existing taxes applicable to digital services supplied by non-resident companies to consumers in Ghana.
In a statement issued on Wednesday, the Authority stated that no new tax is being introduced and that the existing VAT rate remains unchanged.
“VAT on electronically supplied services by non-resident providers is already a statutory requirement under Ghana’s tax laws,” the statement read.
The GRA further explained that the applicable effective tax rate remains 20 per cent, comprising 15 per cent VAT, 2.5 per cent National Health Insurance Levy (NHIL) and 2.5 per cent Ghana Education Trust Fund (GETFund) Levy. The new digital collection system, it said, does not increase these rates.
The Authority assured consumers who are already paying VAT on digital services that they should not be charged again under the new arrangement. It revealed that approximately 92 non-resident digital service providers are currently registered and remitting VAT to the GRA. Where taxes are already included in subscription charges, the new system will not lead to additional charges on the same transaction.
However, the GRA disclosed that it has identified about 100 additional non-resident digital service providers that are not currently charging and remitting the required taxes.
“These providers will be progressively brought into the tax net. As a result, consumers using such services may begin to see statutory taxes reflected in payments where they were previously not being charged,” it stated.
The Authority indicated that the new system will improve transparency and accountability in tax administration. Under the existing arrangement, the GRA relies largely on foreign digital service providers to declare transactions and remit the relevant taxes. The enhanced 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.
The GRA noted that the measure applies only to digitally supplied services such as streaming subscriptions, cloud computing, online gaming and digital advertising that are paid for through Ghana-issued payment instruments, including bank cards, mobile money and other digital payment platforms. Imported physical goods purchased through international e-commerce platforms will continue to be subject to existing customs procedures.
The Authority said it would continue engaging banks, payment service providers and digital service providers to ensure consumers are adequately informed and protected against duplicate taxation.
According to GRA, improvements in the collection of an existing tax should not be mistaken for the introduction of a new tax.
It stated that the objective of the system is to strengthen compliance, promote fairness between resident and non-resident service providers, and ensure that taxes already mandated by law are properly collected and accounted for.
The Authority reaffirmed its commitment to the fair, transparent and efficient administration of Ghana’s tax laws while leveraging technology to improve domestic revenue mobilisation and protect the interests of taxpayers.
Margaret Adjeley Sowah, ISD
