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.
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:
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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):
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Special relief Special relief applies to:
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Zero-rated supplies Zero-rated supplies include (but are not limited to) the following:
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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:
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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:
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Value of supply The value of supply rules are as follows:
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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:
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:
VAT invoices issued through the CIS will have the following additional features in order to be certified.
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:
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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. |