The authority also stated that, beginning April 1, the collection of value-added tax (VAT) on e-commerce would not apply to businesses registered and operating in Ghana but selling their goods and services online.
In response to calls for clarification from the business community, the tax collection and administration body explained that the VAT on E-commerce was the implementation of a nine-year-old law that imposed a ‘E-commerce tax’ on non-resident businesses and entrepreneurs earning revenue in the country but not currently paying taxes.
It stated that the tax applied to companies such as Google, Facebook, Instagram, LinkedIn, Facebook, Amazon, and WhatsApp, as well as betting and gaming firms that are generally based outside of Ghana but earn revenue from the country through services rendered to residents and businesses within the jurisdiction.
Mr. Edward Appenteng Gyamerah, Commissioner of the GRA’s Domestic Tax Division (DTRD), stated in an interview last week that because the firms did not have physical presence (PE) in the country, traditional tax laws could not apply to them, allowing those businesses to avoid the tax net.
To address this, Mr Gyamerah stated that the VAT Act (2013), Act 870, imposed VAT on the aforementioned businesses in order to ensure that individuals and institutions providing digital services for use and enjoyment in Ghana also paid tax.
However, the DTRD Commissioner explained that GRA had been unable to ensure compliance with the law due to a lack of relevant tools to, among other things, monitor the transactions of the companies for the purposes of applying the VAT.
He stated that the aforementioned tools, including a portal for non-resident businesses providing services for use and enjoyment in Ghana to register and pay the tax, had been developed, paving the way for the rollout to begin in April.
Mr Gyamerah stated that companies had already begun registering with the authority on the portal following various discussions on the tax modalities.
He stated that the authority hoped to collect GH2.7 billion from VAT on E-commerce within the next eight months.
He explained that GH1.7 billion would come from betting and gaming companies, with the remainder expected to come from E-commerce service providers.
The Digital 2022 Report, a global report that tracks digital developments, discovered that annual spending on online consumer goods purchases increased to $3.98 billion in 2021.
According to the report, which was released in February, $62.11 million was spent on video downloads in the country last year.
Mr Gyamerah urged Ghanaians to support the GRA in enacting the tax in order to ensure that companies profiting from Ghana and its citizens paid the required tax.
According to him, non-resident businesses that provide digital services for use and enjoyment in Ghana are not paying taxes to the country.
Instead, he claimed that such businesses diverted taxes to their home countries, which was condemned by global tax bodies and organizations such as the Organisation for Economic Cooperation and Development (OECD).
He went on to say that the digital economy, of which E-commerce was a critical component, was a developing sector that tax authorities around the world were grappling with, emphasizing the need for Ghanaians to support the GRA in order for the VAT on E-commerce to be a success.
He stated that it would ensure that money spent by Ghanaians and resident businesses on gaming, betting, and online service providers not based in the country was taxed and used to fund development.
