Ghana

Overview

In 2013 parliament passed the Value Added Tax Act, 2013 (Act 870) (VAT Act) to repeal and replace an older VAT Act. The VAT Act became effective in January 2014. The Value Added Tax Regulations 2016 (L.I 2243) came into force on 3 August 2016.

The National Health Insurance Levy (NHIL) was also introduced on 4 November 2004 as a consumption tax, similar to VAT, to specifically secure the provision of basic healthcare services to persons resident in the country through mutual and private health insurance schemes. The current National Health Insurance Act, 2012 (Act 852) was gazetted and became effective in November 2012. Prior to 1 August 2018, the NHIL was fully administered alongside VAT by the Ghana Revenue Authority. Effective 1 August 2018, the NHIL is a straight levy not subject to an input tax deduction.

The Ghana Education Trust Fund (GETFund) was introduced on 1 September 2000 under the GETFund Act 2000 (Act 581), to provide finance to supplement the provision of education at all levels by the government. Prior to 1 August 2018, a component of VAT was earmarked for the GETFund. Effective 1 August 2018, like the NHIL, the GETFund Levy (GETFL) is a straight levy not subject to an input tax deduction.

Effective 1 May 2021, a 1% COVID-19 Health Recovery Levy (CHRL) was introduced to be charged on all taxable supplies. Similar to the NHIL and the GETFL, CHRL is not deductible as an input tax.

Navigation

Rates and scope
VAT registration
Output tax
Input tax
International trade
Place, time and value of supply
VAT compliance
VAT records
Specific VAT rules
Other indirect taxes
Other taxes/levies administered by Customs

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Release date: May 2023

Rates and scope

The VAT Act provides for a standard rate of 15% for VAT (effective 1 January 2023, previously 12.5%), 2.5% for NHIL, 2.5% for GETFL and 1% for CHRL. These rates apply to all supplies of goods and services that do not qualify for an exemption, zero-rating or the VAT Flat Rate Scheme (VFRS). The VFRS is now only restricted to retailers of tangible goods with an annual taxable supply value of between GH₵ 200,000 (about US$17,000) and GH₵ 500,000 (about US$42,000) (inclusive) and has a rate of 3%, unless varied by the Commissioner-General (C-G). Together with 1% CHRL, suppliers under the VFRS are required to charge tax at a total rate of 4% on their taxable supplies. Taxable persons under the VFRS are not eligible to deduct input taxes.

VAT, NHIL, GETFL and CHRL (together loosely referred to as VAT) are charged on the supply of all goods and services in Ghana by a taxable person and also on the imports of goods and services into the country, except when the goods and services are specifically exempt.

VAT registration

Compulsory registration

A person has to register for VAT if they make or expect to make a taxable supply of goods or services that exceed:

GH₵ 200,000 (about US$17,000) over a 12-month period
GH₵ 50,000 (about US$4,200) over a three-month period and there are reasonable grounds to believe the aggregate supplies for those three months and the consecutive nine months will exceed GH₵ 200,000.

Voluntary registration

Any business may apply voluntarily to be registered for VAT by the C-G.

Group and branch registration

Two or more corporate bodies may be registered as members of a group if each member is a registered corporate body in Ghana and has an established place of business, where one of them controls the others in the group, or one company controls all the members of the group.

A taxable person applying for separate branch registration must state the branches and divisions, including self-accounting branches, where the business has more than two branches or divisions.

Non-residents

A non-resident business needs a physical representative to register for VAT. If requested, and where permissible by internal independence requirements, PwC will act as representative in the processing of VAT returns and advise on issues relating to VAT compliance and the submission of cheques for agreed VAT liability to the DTRD of GRA.

Where unregistered non-resident persons providing telecommunication or electronic commerce services for use or enjoyment in Ghana other than through a VAT-registered agent make taxable supplies exceeding the registration thresholds, they are required to register and account for VAT. This can be done through GRA’s online portal.

Application for registration

Anyone who qualifies to register has to apply to the C-G of the GRA for registration as a taxable person.

Failure to register attracts a penalty of up to twice the amount of tax on taxable supplies, payable from the time the person was required to apply for registration until they file an application with the C-G.

Deregistration

Businesses which no longer qualify for VAT registration can be deregistered but have to reregister if the qualifying threshold is met again.

Output tax

Calculation of output tax

Output tax is calculated by applying the rate of the tax to the taxable value. This is computed by first applying the 2.5% NHIL, 2.5% GETFL and 1% CHRL to the tax-exclusive amount, and then applying the 15% VAT on the NHIL, GETFL and CHRL inclusive amount. This gives an effective tax rate of 21.9%. Advertised prices are assumed to include VAT, NHIL, GETFL and CHRL. Therefore, when prices are charged exclusive of such taxes, VAT, NHIL, GETFL and CHRL at an effective rate of 21.9% (in total) must be added.

Exempt supplies

Exempt supplies for which no credit is allowed include (but are not limited to):

certain medical and locally produced pharmaceutical products
basic food items produced in the country, usually in their raw state
books and domestic newspapers (excluding imported textbooks, imported newspapers, architectural plans, almanacs, calendars and other printed matter)
crude oil and hydrocarbon products
building and construction, including the right to occupy land or buildings (construction should be civil engineering works of a public nature)
financial services
supply of postage stamps
goods for the disabled, i.e. articles designed exclusively for use by the disabled
machinery, apparatus, appliances, parts used in agriculture, manufacturing, mining (as specified in the mining list), railways and tramways, upstream petroleum operations (as specified in the petroleum list), and dredging
domestic transport by bus and similar vehicles, train, boat, and air, but excluding haulage and vehicle rental
education services
electricity supplied to a dwelling up to lifeline units
water, excluding bottled and similarly packaged water, and distilled water
a stake in the National Lotto organised by the National Lottery Authority
a wager or stake in any form of betting, including lotteries and from gaming machines
fishing equipment
locally produced textbooks and exercise books
locally manufactured agricultural machinery, and other agricultural implements or tools
agricultural inputs
management fees charged by private equity, venture capital and mutual funds
importation of plant and machinery designed specifically for use in the automotive industry and kits by an automobile manufacturer or assembler registered under the Ghana Automotive Manufacturing Development Programme.

Special relief

Special relief applies to:

supplies to the president of the Republic of Ghana
supplies for the official use of any Commonwealth or foreign embassy, mission or consulate— reciprocal application
emergency relief items approved by parliament
supplies for use by a permanent member of the diplomatic service of any commonwealth or foreign country, exempted by parliament from the payment of customs duties — reciprocal application
supplies for use by an international agency or technical assistance scheme where the terms of the agreement made with the government include exemption from domestic indirect taxes.

Zero-rated supplies

Zero-rated supplies include (but are not limited to) the following:

exports of taxable goods
supplies to a free-zone enterprise
supplies of locally manufactured textiles (from 2019, extended up to 31 December 2023) by a local manufacturer with approval from the Ministry of Trade and Industry
supply of locally assembled vehicles under the Ghana Automotive Development Programme, up to 31 December 2023
goods shipped as stores on vessels and aircraft leaving the territory of Ghana
services consumed outside Ghana.

Input tax

Input tax allowed

A taxable person may claim input tax on goods and services purchased in Ghana, or goods imported by them and used wholly, exclusively, and necessarily for business purposes, provided (inter alia) the supply is a taxable supply. The NHIL,GETFL and CHRL are not deductible as input tax.

Reverse VAT on imported services is not claimable.

Non-deductible input tax

Input tax deductions are not allowed on the following:

imported services which are not used to make taxable supplies
purchases or imports in respect of exempt supplies
on the expiration of six months from the date the tax accrued
importation of motor vehicles or vehicle parts, unless the taxable person is in the business of dealing in or hiring vehicles or selling vehicle parts
entertainment, including restaurants, meals, and hotel expenses, unless the taxable person conducts a business of that nature
fees or subscriptions in respect of membership of a club, association or society of a sporting, social or recreational nature.

Partial exemption

Input tax is restricted to the part of taxable supplies or imported goods that are used for business purposes. If a taxable person makes both taxable and exempt supplies, a portion of VAT incurred may be recovered on the taxable purchases and imports of goods that can be attributed to the taxable supplies made.

Pre-registration and post-deregistration VAT

A taxable person may recover the VAT on stock and capital goods purchased or imported prior to registration, provided the goods are still in the ownership and possession of the taxable person, and the purchase or importation occurred not more than four months or six months prior to registration, in the case of stock and capital goods respectively.

Upfront payment of VAT by unregistered importers

The VAT legislation has been amended such that an unregistered person importing taxable goods into Ghana is liable to make an upfront payment of 12.5% of the customs value of the taxable goods in addition to requisite penalties. The unregistered importer may however recover the upfront payment upon registration and subsequent filing of a VAT return.

International trade

Imports

The importation of taxable goods other than exempt goods and services is subject to VAT, and the importer of the goods is required to account for the tax.

The importation of taxable services which are not used in making taxable supplies is subject to VAT. The receiver of the service must account for VAT by means of a reverse-charge mechanism. The reverse charge applies to services that are supplied by a non-resident business and received by a resident taxable person for consumption in Ghana. This reverse VAT is not claimable.

Exports

Exports of taxable goods attract VAT, NHIL, GETFL and CHRL at the rate of 0%. The export of services is zero-rated (a VAT rate of 0%) if all requirements are met.

Withholding of VAT

The C-G has appointed some persons as VAT withholding agents. These agents are required to withhold from payments for standard rated VAT supplies 7% of the taxable output value for VAT purposes, i.e. the taxable value inclusive of NHIL, GETFL and CHRL, and issue a Withholding VAT Credit Certificate at the time of payment.

Place, time and value of supply

Place of supply

The place of supply of goods is typically the place from which the goods are delivered or made available by the supplier or, if delivery involves transportation, the place where the goods are when transportation commences. The general place of supply of a service is the supplier’s place of business or the place from which the service is supplied or rendered. For some services, the place of supply is where the recipient uses the service.

Time of supply

The general time of supply rules are as follows:

goods or services applied for own use — the date on which the goods or services are first applied for own use
goods or services supplied by way of a gift — date on which ownership of the goods passes or the performance of the services is completed
in any other case — the earliest of the date on which:
- the goods are removed from the taxable person’s premises, or from other premises where the goods are under the taxable person’s control
- the goods are made available to the person to whom they are supplied
- the services are supplied or rendered
- payment is received
- the tax invoice or sales receipt is issued.

Value of supply

The value of supply rules are as follows:

supply for monetary consideration — the amount of the consideration plus all duties and taxes but excluding VAT
supply that is not for monetary consideration or partly for monetary consideration — the open-market value of a similar supply, excluding VAT.

VAT compliance

Tax period

Tax period means one calendar month.

Returns and payment of VAT

VAT and NHIL/GETFL/CHRL returns must be submitted monthly and must be filed no later than the last working day of the month immediately following the month to which the return relates. Payments must be made by the due date for filing. A taxable person who has received imported services must complete and submit specially designed forms for the services by means of a reverse charge within 21 days after the month in which the services were imported.

Payment of the imported services VAT must be made with the submission of the declaration.

The amount of VAT paid by the registered person who makes standard rated VAT supplies can be claimed as an input tax deduction. However, reverse VAT and VAT on some items cannot be claimed as deductible input tax.

The GRA is encouraging electronic filing of VAT returns, although manual VAT return filing is still acceptable.

Returns and payment of withheld VAT

Withholding VAT returns must be submitted no later than the 15th day of the month immediately following the month to which the return relates.

Payments must be made by the due date for filing.

Electronic invoicing

Effective October 2022, taxpayers are required to issue electronic tax invoices or sales receipts from the Certified Invoicing System (CIS). The CIS is to be integrated with both the taxpayers’ internal invoicing system and that of the GRA.

The initial transition period of one year for moving from manual VAT invoicing to the electronic invoicing system was scrapped for immediate compliance from January 2023. Failure to comply is a penalty being the higher of GH₵50,000 and three times the amount of tax involved.

The onboarding of taxpayers is currently ongoing in stages.

Interest and penalties

The following pecuniary penalties/ interest are charged:

late submission of a return — penalty of GH₵ 500
for each additional day the return is not submitted — penalty of GH₵ 10
late payment — interest of 125% of Bank of Ghana monetary policy rate compounded monthly and applied on the tax due
failure to register — double the tax payable had the taxpayer registered when required
making a claim for a refund which you are not entitled to — twice the original refund request, plus interest
general penalty — up to three times the amount of tax involved.

The VAT Act does not provide an option for the waiver of interest for non-compliance.

Refunds

Credit is given to offset the following month’s liability. A request for a refund may be made where the excess credit has been outstanding for a continuous period of three months or more under certain conditions.

Objections and appeals

Disagreement with a decision of the GRA must be lodged with the C-G of the GRA within 30 days after notice of the decision has been served on the taxpayer or upon the taxpayer’s becoming aware of the decision.

A person dissatisfied with the decision of the C-G may lodge an appeal with the Independent Tax Appeals Board (ITAB) within 30 days after being notified of the decision of the C-G. The board is intended to enhance the transparency and fairness of the tax objection and adjudication process as well as reduce litigation pressures on the tax courts. Any party that is not satisfied with the decision of the ITAB may lodge an appeal with any court with jurisdiction to hear and determine tax disputes. Thus taxpayers’ disputes can be sent to ITAB for resolution.

Time limits

The time limit for payment of tax due is the last working day of the month immediately following the month to which the return relates. The maximum period for claiming input tax is six months from the date on which the deduction accrued. The claim is forfeited on the expiration of a period of six months.

Refund claims for overpaid VAT must be submitted within six months after the date on which the excess arose.

VAT records

Tax invoices

Invoices must be pre-printed as authorised by the C-G of the GRA. Invoices that are not pre-printed must be approved by the Commissioner-General of the GRA before they are used. An invoice for VAT purposes should contain the following information:

invoice number
the supplying taxable person’s name, VAT registration number and address
the customer’s name or business name and address, and VAT registration number, if a taxable person
description of goods or services supplied, including the quantity of the goods or the extent of the services
date of supply, invoice or payment
invoice amount (excluding VAT), VAT amount and VAT rate
the rate of any discount
total of VAT values and total inclusive of VAT.

VAT invoices issued through the CIS will have the following additional features in order to be certified.

the signature (16 figures separated by dashes)
the scannable QR code
the time stamp
other SDC information.

Except with the approval of the Bank of Ghana, invoicing in foreign currency by one resident person to another resident person is not allowed.

Credit notes and debit notes

A credit note is issued to a recipient of a supply where the amount on a tax invoice exceeds the amount that should have been charged, while a debit note is issued to a recipient of a supply where the amount on a tax invoice is less than the amount that should have been charged. Their issuance should be based on a fact that:

the supply has been cancelled
the nature of the supply has been fundamentally varied or altered
the previously agreed consideration for the supply has been altered by agreement with the recipient of the supply, whether due to an offer of a discount or for any other reason
the goods or services, or part thereof, if they have been returned to the supplier.

Additional export documentation

Proof of export documentation is required in substantiating to the C-G that the taxpayer should apply 0%.

Record-keeping

Records must be kept within Ghana for up to six years, unless the C-G’s approval is obtained to keep the records for a shorter period. Records may be kept in electronic form with permission from the C-G.

Specific VAT rules

Bad debts

A taxable person may recover input VAT on bad debts where the purchaser becomes insolvent and fails to pay all or part of the taxable amount of the sale plus the VAT imposed, and the debt becomes a bad debt and is certified as such by the C-G of the GRA. However, a debt previously written off as a bad debt for which credit has been given that is later recovered is subject to VAT on the amount recovered.

Land and buildings

Sale of land and buildings is typically exempt from VAT under certain conditions.

Leasing

The taxable value of a taxable supply of goods under a finance lease is the open-market value of the goods at the time of the supply. This excludes any interest or finance charges.

Promotional gifts

Promotional goods attract VAT. Input tax may be deducted when promotional goods are acquired.

Second-hand goods

Taxable persons who deal in locally procured second-hand goods may apply to the C-G of the GRA for approval to charge VAT on the difference between the buying price and the selling price of the goods, subject to certain conditions.

Transfer of a business

The transfer of a business as a going concern from one taxable person to another is zero-rated if certain conditions are met.

Warranty repairs

No special rules apply in this regard. However, if the warranty is deemed to be part of a taxable service, VAT will be charged.

Other indirect taxes

Import duty

Import duty ranges from 0% to 35% as specified under the ECOWAS Common External Tariff and Other Schedules.

Excise duty

Excise duty is limited in scope and is charged on some imported and locally manufactured products such as tobacco products, plastic products, alcoholic beverages and non-alcoholic beverages. Excise duty typically ranges from 0% to 175% of the ex-factory price or CIF (cost, insurance and freight) values. Specific excise duty rates also apply on tobacco products.

An environmental excise tax of 10% applies to specified locally manufactured and imported plastic and plastic products.

Excise tax stamps

Excise tax stamps are to be affixed to specific excisable goods which are manufactured in or imported into the country. They apply to tobacco products, alcoholic and non-alcoholic carbonated beverages, bottled water, textiles and other goods specified by the minister responsible for finance, before sale or entry into the market.

Electronic transactions levy

The electronic transaction levy (e-levy) at the rate of 1% is applicable on qualifying electronic transfers conducted by electronic money issuers, payment service providers, banks and specialised deposit-taking institutions above specified daily thresholds.

Communications service tax

The Communications Service Tax (CST) at the rate of 5% is levied on charges for the use of communications services that are provided by electronic communications service providers other than private electronic communication services.

Special petroleum tax

Persons licensed to operate as oil marketing companies are required to charge a special petroleum tax at specific rates per litre or kilogramme on petroleum products such as petrol, diesel, kerosene, liquified petroleum gas and natural petroleum gas.

Sanitation and pollution levy

A sanitation and pollution levy of GH₵ 0.10 per litre of petrol and diesel is in force, together with other levies/charges, under Ghana’s Energy Sector Levies Act (ESLA).

Airport tax

Airport tax is levied on local and foreign travels. The tax is GH₵ 5 for local travels and US$60–US$200 for foreign travels.

Other taxes/levies administered by Customs

ECOWAS levy

An Economic Community of West African States (ECOWAS) levy of 0.5% is imposed on imports of goods from non-ECOWAS member states into ECOWAS member states.

African Union import levy

An African Union (AU) import levy of 0.2% applies on eligible imports of goods from non-AU member states into AU member states for consumption within the member state.

Special import levy

A special import levy of 2% applies on certain imported goods.This levy is expected to expire by December 2024.

Ghana Export-Import Levy

A 0.75% export and import (EXIM) levy applies on all imports of goods into Ghana. Proceeds from the EXIM levy are subsequently allocated to the Ghana EXIM Bank and the Ghana Export Promotion Agency.