On 26 January 2022 the Ghana Revenue Authority (GRA) announced that revisions to the Tobacco Tax will be implemented later this year after consultations with relevant stakeholders are completed. The GRA intends to introduce a combination of specific excise tax and ad valorem duty on tobacco products.

The announcement was made at the time of the launching of the Study Report on Economics of Tobacco in Ghana, prepared by Vision for Alternative Development (VALD), a Ghanaian non-governmental organisation (NGO).

The GRA’s Head of Excise explained that the decision to apply taxation by this method was taken by the Economic Community of West African States (ECOWAS), which has issued a Directive for member states to apply tax of at least 50% ad valorem duty on tobacco products and a specific excise tax of 2 cents per stick.

The introduction of the combined approach will allow the GRA to resolve the problem of valuation, which has led to a relatively low duty on tobacco because nominally high ad valorem rates were applied to low valuations.

In Ghana, tobacco products including cigarettes, cigars and cheroots are subject to a number of taxes including excise tax, value added tax, import duty, the health insurance levy, the ECOWAS levy and an economic development and investment levy. However, the taxes are applied to the cost, insurance and freight (CIF) value which is often much lower than the final retail price. As a result, the tax content of the retail price has been relatively low and the GRA considers that the combined approach of a specific excise duty and an ad valorem duty can resolve this issue.