No extra 20% on digital subscriptions already taxed, GRA says

Ghana’s new digital VAT collection system will not add another 20% to subscriptions whose prices already include the tax, the Ghana Revenue Authority’s Commissioner-General has said.

Anthony Kwasi Sarpong said customers of about 92 foreign service providers already remitting VAT to the authority should not face price increases as a result of the change.

However, the GRA has identified about 100 additional providers that are not charging VAT and intends to bring them into the collection system gradually. His assurance therefore applies to services already collecting the applicable tax.

Speaking on Joy FM’s Super Morning Show on Wednesday, October 14, during a discussion about Netflix, Spotify and other digital services, Mr Sarpong said the reform changes how existing taxes are collected.

“So this system is not adding another 20 per cent to what you already pay. It is already embedded, and consumers are paying,” he said.

“Nothing will change in terms of pricing from 92 merchants or entities.”

He did not name all 92 providers or specify how the additional providers would price their services once brought into the system.

The clarification follows the introduction of the GRA’s Real-Time VAT framework for qualifying cross-border digital services.

Under the framework, participating financial institutions collect the existing tax at the point of payment, according to an earlier explanation by Elsie Appau-Klu, technical advisor to the Commissioner-General.

The combined 20% charge comprises 15% VAT, a 2.5% National Health Insurance Levy and a 2.5% GETFund Levy.

Mr Sarpong said the current arrangement relies on foreign providers to report their transactions and remit taxes collected from customers in Ghana. That limits the authority’s ability to independently verify the number and value of transactions, he said.

Using Netflix as an example, he explained that the new system would separate the tax component when a customer pays, transfer it to the government and send the remaining amount to the provider.

“We are using technology to smartly account for and collect the component that belongs to the government of Ghana,” he said.

According to Mr Sarpong, the system would allow the GRA to establish transaction volumes, payment values and the corresponding tax due, rather than relying solely on information supplied by companies.

The framework covers electronically supplied services from non-resident providers paid for with Ghana-issued payment instruments. These include bank cards, mobile money accounts and digital wallets.

Streaming subscriptions, cloud computing, online gaming and digital advertising are among the services covered.

Mr Sarpong confirmed that collection would extend beyond bank card payments to mobile payments and other digital platforms when qualifying transactions pass through the payment system.

However, the initial rollout does not cover physical goods bought from platforms such as Amazon and Alibaba.

He said imported goods already undergo tax assessment at Ghana’s borders, where applicable duties and VAT are calculated.

“So it is not going to affect goods or products, tangible products at the moment,” he said.