The government of Ghana has issued a statement regarding new VAT obligations for mortgage providers and operators in the real estate and construction sector.
Under the statement, the sale of each unit of immovable property by an estate developer is taxable under the VAT law at a flat rate of five percent, calculated on the value of the unit of immovable property. All other taxable supplies/services made by estate developers, as defined by the VAT law, are taxable at the standard VAT/National Health Insurance Levy (NHIL) rate of 17.5 percent.
The statement however highlights that Item 18 of the First Schedule of Act 870 (headed “Exempt Supplies”) exempts from VAT including; immovable property (including land, attributable to a dwelling), accommodation in a dwelling, land used or to be used for agricultural purposes; and civil engineering public works (including roads and bridges).
