Ghana – VAT Withholding on Online Transactions 

For the last six months, Ghana Revenue Authority(GRA) has been working on the development of the digital tax compliance tool, specifically designed to increase the public revenue from capturing tax “well hidden” in the digital economy. 

In the last few months, the testing phase has been rolled out, and the obtained results are promising. The idea of this digital tax tool is to automate the VAT deduction at source from online transactions. The VAT withholding should happen at the point of purchase, and in that manner, the possibility of not reporting is drastically reduced to a bare minimum. 

Brick and mortar retailers, as well as domestic service providers, charge, collect, and remit VAT for all taxable supplies. However, when it comes to the e-commerce and digital economy, the data shows a significant VAT gap, meaning that the trend of not charging, or charging and not reporting VAT for these sales, is very high. 

GRA is rolling out the automated VAT deduction tool(tax withholding) at the point of purchase for most of the online transactions. Domestic and non-resident persons should be in scope. The rollout should be gradual. 

Effective Date

The last official notes state that by August, 2026, the automated VAT withholding system should be in the production phase. 

Digital Economy – Impact 

Non-resident providers of digital services that are registered for VAT directly or through a local agent shouldn’t be affected by the new measures. However, the same narrative shouldn’t be for non-registered service providers that provide digital services.

In the upcoming period, more updates should be shared on how the new VAT withholding regime, specifically designed for online transactions, should function. There are indications that local financial institutions should be responsible for withholding and remitting VAT on these transactions.