Value-added tax (VAT)
Other than exempt goods and services, VAT is charged on the following:
- Supply of goods and services made in Ghana.
- Importation of goods.
The standard VAT rate is 12.5%, except for supplies of a wholesaler or retailer of goods, which are taxed at a total flat rate of 3%.
VAT is charged on the supply of goods and services where the supply is a taxable supply and made by a taxable person in the course of business.
Taxable persons or VAT-registered persons are to use a GRA-approved fiscal electronic device to issue a fiscal receipt to each customer. The fiscal receipt is to contain the information as specified in the Taxation (Use of Fiscal Electronic Device) Act, 2018 (Act 966).
VAT is payable by the taxable person making the supply in the case of taxable supply and by the importer in the case of imported goods.
Most professional services are also subject to the same VAT rate, including the following:
- Management services.
- Insurance brokerage and other services.
- Financial, tax, and economic consulting.
- Engineering and technical services.
- Accounting services.
- Courier services.
- Legal services.
- Provision of satellite television.
- Architectural services.
- Services rendered by surveyors.
Exports of goods and services are zero-rated. Unless specifically exempt, supplies of all goods and services are subject to VAT.
A person entitled to relief is required to pay the tax and apply for refund unless otherwise directed by the Minister responsible for finance.
The GRA’s appointed VAT-registered withholding agents are expected to withhold 7% of the taxable value of goods and services when making payments for supplies subject to VAT at the standard rate of 12.5%.
National health insurance levy (NHIL), Ghana education trust fund levy (GETFL) and COVID-19 health recovery levy (CHRL)
Unless otherwise exempted, NHIL of 2.5%, GETFL of 2.5% and CHRL of 1% are charged on the following:
- Supply of goods and services provided in Ghana.
- Importation of goods.
- Imported services.
The NHIL, GETFL and the CHRL are chargeable on the value of the taxable supply.
Customs and excise duties
Customs and excise duties are imposed on the importation of goods at the port of entry and certain manufactured goods produced or imported into Ghana.
The following rates of excise duties apply on the ex-factory price:
|Malt drink||2.5 to 17.5|
|Beer||10 to 47.5|
|Spirits||0 to 25|
|Cigars and cigarettes||175|
|Snuff and other tobacco products||175|
The excise duty payable on malt drinks, beer, and stout, other than indigenous beer, is determined by the percentage of local raw materials used. Local raw materials do not include water.
In accordance with the Excise Tax Stamp Act, 2013 (Act 873), qualifying excisable products that are imported or locally manufactured are required to be affixed with tax stamps specified and supplied by the GRA before they are delivered ex-factory, cleared from any port of entry, or sold at any commercial level.
The affected products are:
- All cigarettes and other tobacco products.
- Alcoholic beverages whether bottled, canned, contained in kegs for sale, or packaged in any form.
- Non-alcoholic carbonated beverages whether bottled, canned, or packaged in any form.
- Bottled water.
- Any other excisable product prescribed by the Minister of Finance.
In addition, the Special Import Levy Act imposes a levy of 2% on the cost, insurance, and freight (CIF) value of certain imported goods.
The African Union Import Levy Act, 2017 (Act 952) also imposes a levy of 0.2% on the CIF value of eligible imports from Non-African Union Countries.
Property tax rates are payable by owners of immovable property to the local District Assembly/Municipal Authority. The rate of property tax differs depending on the location of the property.
Stamp duty is paid, at rates ranging between 0.25% to 1% and 0.05 Ghana cedi (GHS) to GHS 25, depending on the type of transaction and the instrument. A stamp duty of 0.5% applies on the initial stated capital and any subsequent increase in the stated capital.
The stamp duty is not a tax on transactions but on documents brought into being for the purposes of recording transactions. It is therefore a tax on documents or specific instruments that have legal effect, such as the following:
- Insurance policies.
- Awards of cost in matters of dispute.
- Conveyances or transfers on the sale of any property.
- Appointment letters of new trustees.
- Natural resource leases or licences (e.g. mining, timber).
- Agreements or memoranda of agreement.
- Bills of exchange (e.g. issue of cheques).
- Bills of lading.
Employers are required to withhold tax (pay-as-you-earn or PAYE) on employees’ salaries and other emoluments, including benefits in kind, on a monthly basis at the graduated rates, with the highest rate at 30% for tax resident employees. A flat rate of 25% is applicable on the salaries and other emolument of non-resident employees. Employers are to remit the withheld taxes to the GRA by the 15th day of the subsequent month.
Failure to withhold the tax and remit to the GRA on the due date attracts an interest penalty of 125% of the statutory rate, compounded monthly and applied to the amount outstanding at the start of the period.
Employers are also required to file annual returns of employees by 31 March of the year following the year to which the returns relate.
Social security contributions
The social security contribution scheme is structured into three tiers, with the first two requiring mandatory contributions and the last one being voluntary. The employee is required to contribute 5.5% with the employer contributing 13%. Of the total contribution of 18.5%, 13.5% is contributed to the first tier and 5% to the second tier schemes.
Communications service tax (CST)
CST of 5% is levied on charges payable by both individual and corporate users of electronic communication services (ECS) provided by service providers other than private electronic communication services. The levy is also applicable to any form of recharge and is payable once a person makes a payment for ECS regardless of whether or not that person is authorised or permitted to provide ECS under the Electronic Communication Act (Act 755). Note that the definition of electronic communication includes interconnection.
Local business permits
Business ‘permits’ are payable annually to local District Assemblies or Municipal Authorities. The amount is dependent on the physical location where the business activity is conducted. It is therefore possible that if a taxpayer operates from two business locations in different regions, such permits would be paid to two different local authorities.