Ghana: Amendments to the VAT Act

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The Commissioner-General of the Ghana Revenue Authority (GRA) on 24 April 2017 published a notice on the Value Added Tax (Amendment) Act, 2017 (Act 948), informing taxpayers that the following changes have been made in relation to Value Added Tax (VAT):

  1. Section 3 of Act 870 Amended
  • The combined tax rate of 17.5% (VAT 15%, NHIL 2.5%) has been reduced to a flat rate of 3% calculated on the value of the taxable supplies in respect of retailers and wholesalers of goods. In order to avoid any doubt, the notice clarifies that the tax rate for the value of the taxable service and the taxable value of the import is 17.5%.
  • However, the 3% charged on the value of the taxable supply does not apply to the supply of any form of power, refrigeration or ventilation equipment in accordance with s. 27 of the Value Added Tax Act, 2013 (Act 870).
  1. Section 48 of Act 870 Amended
  • The Value Added Tax (Amendment) Act, 2017 (ACT 948), has amended Section 48 of the Value Added Tax Act, 2013 (Act 870) by deleting paragraph (d) of sub-section (1) and;
  • The new text for subsection (7A) provides that “a taxable person to whom subsection (2) of section 3 applies does not qualify for an input tax deduction in respect of a supply of goods”. This means that a retailer or wholesaler who accounts for the value of taxable supplies through the VAT Flat Rate Scheme at 3% does not qualify for an input tax deduction.
  1. Section 65 of Act 870 Amended
  • The VAT Flat Rate Scheme has been defined as accounting for VAT on the value of the total taxable goods supplied at 3%.

The above-mentioned amendments entered into force on 7 April 2017, the date of publication of the Official Journal.

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