Background 

One of the key years in which the Ghana VAT framework for non-resident providers of digital services was introduced was 2022. On September 12, 2022, the President assented to a Bill, which became a Law known as the Value Added Tax (Amendment) Act 2022. 

The Amendment Act was adopted to amend the principal VAT Act, 2013(Act 870). The Amendment Act introduced the concept of electronic commerce, digital services, and non-resident providers, and upon these provisions, new tax compliance frameworks were conceptualized. 

VAT Framework for Non-Resident Digital Service Providers

To address some of the challenges that arose with the introduction of the indirect tax framework for non-resident digital service providers, the principal VAT Act, 2013, has been amended on a few occasions. The concept of the VAT Ghana framework for non-resident digital service providers can be found in the lines of section 16, primarily in subsections (2) and (3). 

Taxable persons in Scope 

Section 16 of the principal Act indicates that unregistered non-resident digital service providers that provide digital services to local customers should register for VAT.  The overseas providers could register directly or through a local agent, who will be held responsible for full VAT compliance. 

Digital Services in Scope 

The VAT Act 2013 indicates that the following types of digital services are in scope of the VAT: 

• Social networking,
• Online gaming,
• Cloud services,
• Video or audio streaming, and
• Digital marketplace operations
• Online advertisement

The list isn’t final; a few amendments have been made in that regard. 

VAT Compliance for Non-Resident Digital Service Providers 

The non-resident digital service providers should register for VAT following the path of the simplified online registration procedure, or through a local agent. 

There is no threshold for non-resident digital service providers. 

After successful registration, the registered person is obliged to charge, collect, declare, and pay local taxes following the procedures depending on their status of registration. When the overseas provider registers online, it is mandatory to file online returns and to remit the payment through an online portal designed for this purpose. 

The monthly reporting is in place. The deadline for submission of the return and related payments is the end of the following month. Considering the “potential” technical issues with the portal, it is advisable to make submission of the returns and connected payment at least a few days before the deadline, to avoid any potential fines for late payment. 

Non-resident digital service providers are, in many cases, obliged to issue e-invoices for their B2B suppliers, and also e-invoices(or sales receipts) for their B2C transactions. 

Ghana Revenue Authority has set in place an e-invoicing clearance system, which mandates many digital service providers to integrate their invoicing/billing solution with the GRA platform to be able to issue e-invoices and/or sales receipts to their customers. 

However, for non-resident digital service providers, there is a chance that the obligation to adhere to the local e-invoicing billing is put on the side. The GRA Commissioner General could permit this as well. 

VAT Calculation Logic 

In Ghana, non-resident digital service providers have an obligation to charge, alongside VAT, additional local levies for their supplies. Alongside local VAT that is 15%, they are obliged to charge as well National Health Insurance Levy (NHIL): 2.5%, and Ghana Education Trust Fund (GETFund): 2.5%. 

The calculation logic for the effective Ghana VAT rate (from 2026, 20%) is performed gradually in separate steps. First, levies should be calculated on the taxable amount, and only later is VAT imposed (calculated) on the aggregated amount.  

Penalties 

Non-resident digital service providers that remain unregistered for VAT purposes could face penalties for late registration, late declaration, and skipped VAT payments, as well as a website domain ban, which will unquestionably hurt their income from local customers. 

How to Stay Compliant 

The Ghana VAT regime for non-resident providers of digital services came into force a few years ago. The Ghana Revenue Authority is also preparing to roll out an automated digital compliance tool to monitor online transactions, where VAT hasn’t been collected at the point of purchase. 

We have continuously followed the legislative updates concerning the introduction of the VAT regime for overseas providers of digital services. So, we are up-to-date. We have successfully registered several digital platforms that have a substantial income from local sales. 

The advisory role offered by 1stopVAT for these providers extends from understanding the threshold exposure for registration, accountability for VAT, assistance with the return preparation, and remittance of the owed tax.

Where we cannot manage your VAT requirements directly, we have a great network of local tax agents who will take care of this. 

In addition to successfully managing your registration, we offer additional services for digital service providers in Ghana, such as: 

• Assistance with Tax Reporting(preparation of returns, filing, and remittance)
• Tax Advisory and Ongoing Tax Management
• Correspondence with Tax Authorities 

Takeaway 

Frequently Asked Questions