GRA identifies about 100 additional foreign digital service providers for VAT collection

The Ghana Revenue Authority (GRA) has identified around 100 additional foreign digital service providers that are currently not collecting Value Added Tax (VAT). Commissioner-General Anthony Kwasi Sarpong announced this on Joy FM’s Super Morning Show, discussing the 20% tax on platforms like Netflix and Spotify. These providers will gradually be integrated into the tax collection system as the Authority expands compliance.

Currently, about 92 foreign companies already remit VAT to the GRA. The new mechanism will not alter pricing for these 92 merchants or entities, as it will only affect providers not currently charging VAT. GRA has been requiring foreign companies supplying services to Ghanaian consumers to charge VAT since 2013. The new system aims to improve collection and provide the Authority with a complete view of transactions involving these companies.

Under the existing system, service providers collect payments, report transactions, and then remit the tax to the GRA, leaving the Authority dependent on the companies' declarations. The new system will separate the tax component at the point of payment, transfer it directly to the government, and remit the remainder to the service provider. This technology-driven approach will ensure that the government collects the portion that rightfully belongs to it.

The Real-Time VAT framework for qualifying cross-border digital services is part of this intervention. Elsie Appau-Klu, Technical Advisor to Sarpong, explained that the framework collects existing VAT at the point of payment through financial institutions. The 20% charge includes 15% VAT, a 2.5% National Health Insurance Levy, and a 2.5% GETFund Levy.

The collection system will cover payments made through mobile and other digital platforms, as well as bank cards, not just cards. The initial rollout applies to services, not physical goods purchased from foreign online platforms, as imported goods are already assessed for duties and VAT upon entry into Ghana.