Given the increase in the use of online services and the boost witnessed in the e-Commerce sector following the COVID-19 pandemic, the Ghana Revenue Authority (GRA) decided to put in mechanisms to be able to tax these online businesses and platforms in Ghana. The software to be used to Tax these digital services is believed to commence operations on the 1st of April 2022.
Summary: Here is what you need to know about the new GRA TAX targeting online businesses like JUmia, Netflix, Amazon etc
No. This policy was made in accordance with the Value Added Tax (VAT) Act 2013, Act 870, section 16, subsection 2, which states that non-resident persons (ie. Citizens of Ghana who maintain a permanent home outside Ghana and live in that home for the entire year under assessment or foreign nationals who have been in Ghana for less than 183 days in any 12-month period that falls in the tax year) who provide digital services for use and enjoyment in Ghana other than through a VAT registered agent, are mandated to pay tax.
It is the unavailability of sophisticated resources and the low patronage of online services in Ghana that caused the delay in the implementation of this policy. But as more revenue is expected to be generated from this sector, the government is now set and ready to begin taxation of these businesses.
This VAT, widely known as the social media tax, would capture online businesses on Facebook, Instagram, Whatsapp, Netflix, Amazon, Tomato, Eshop Africa, Jumia, OLX, Hellofood, Dziffa.com among others.
It would also include businesses that offer services such as website supply, web-hosting, distance maintenance of programmes and equipment, music and gaming platforms, online betting platforms, distance teaching, political, cultural-artistic, sporting, scientific, and entertainment broadcasts and events and images, text and information that makes databases available.
The commissioner-general of the GRA is hopeful that the businesses that fall under any of these categories will comply because it is their civic duty.
According to the GRA, this Tax will begin on April 1, 2022
“Special-purpose software has been designed to monitor online businesses and tax them accordingly. Last week, I sat in a presentation for this software, how it works, and the demonstration of it and we are confident that by the 1st of April, the taxation of e-commerce should begin”.
“This non-resident initiative will serve as a pilot to the overall aim of taxing all social media and online operations in the country. “, Reverend Ammishaddai Owusu Amoah, the commissioner-general of the GRA said at the authority’s 2022 management retreat program held at the Volta Serene Hotel in Ho.
Businesses and individuals who are being affected by this tax are expected to sign up on the GRA website by the end of this month, March 2022. All companies that do not comply with this law will be blocked from doing any profitable business in Ghana through a system operated in collaboration with the Bank of Ghana (BoG).
This tax is expected to help mobilize adequate revenue and widen the tax net. It is also projected to generate about GH¢ 1.7 billion for the government. The commissioner-general said this will help the Ghana Revenue Authority (GRA) to meet its target of GH¢80.3 billion internally generated revenue for the year.
