The Ghana Revenue Authority (GRA) has dismissed claims that its newly introduced digital Value Added Tax (VAT) collection system will impose an additional 20 percent tax on subscriptions and payments made to international digital service providers such as Netflix, Google, Amazon and other online platforms.
In a statement issued on Tuesday, the tax authority explained that the new system does not create a new tax or increase existing tax rates. Rather, it is designed to improve the collection and accounting of taxes that are already applicable to digital services supplied by non-resident companies to consumers in Ghana.
According to the GRA, the effective tax rate on qualifying digital services remains unchanged at 20 percent, comprising 15 percent VAT, 2.5 percent National Health Insurance Levy (NHIL) and 2.5 percent Ghana Education Trust Fund (GETFund) Levy. The Authority stressed that the new platform does not alter these rates.
The Authority noted that around 92 non-resident digital service providers are already registered and remitting VAT in Ghana. For customers whose subscription fees already include VAT, the introduction of the new collection mechanism will not result in additional charges.
However, the GRA disclosed that it has identified about 100 additional foreign digital service providers that are not currently charging and remitting the applicable taxes.
These companies will gradually be brought into compliance under the new framework, meaning some consumers may begin to see statutory taxes reflected in payments where they were previously not applied.
Under the new arrangement, tax on qualifying digital transactions will be identified and collected at the point of payment through participating financial institutions and payment service providers. The GRA said this approach will strengthen compliance, improve transparency and ensure that revenue due to the state is properly accounted for.
The system applies only to electronically supplied services, including streaming subscriptions, cloud computing, online gaming and digital advertising paid for using Ghana-issued payment instruments such as bank cards and mobile money. It does not apply to imported physical goods purchased through international e-commerce platforms, which remain subject to existing customs procedures.
The Authority acknowledged concerns about potential duplicate taxation and said it will continue engaging banks, payment service providers and digital service companies to ensure appropriate safeguards and clear communication of charges. Members of the public who believe they have been wrongly charged have been encouraged to contact the GRA through its official channels.
The GRA emphasised that improvements in tax collection mechanisms should not be mistaken for the introduction of new taxes, reiterating that the objective of the initiative is to enhance compliance, promote fairness between local and foreign service providers, and improve domestic revenue mobilisation.
Source: businesspostonline
