The Ghana Revenue Authority (GRA) has clarified that its new digital Value Added Tax (VAT) collection system will not impose an additional 20% charge on consumers, explaining that the tax is already incorporated into payments for affected digital services.
Commissioner-General Anthony Kwasi Sarpong stated that the rollout is designed to improve VAT collection and remittance, particularly from foreign digital service providers, rather than introduce a new tax burden.
“This system is not adding another 20% to what you already pay. It is already embedded, and consumers are paying. So it’s only a smart way to collect.”
GRA Commissioner-General Anthony Kwasi Sarpong
He disclosed that about 92 companies are already remitting VAT to the authority, while approximately 100 emerging entities have been identified for gradual integration into the system. The clarification follows concerns about the potential impact of the digital VAT arrangements on subscription costs and consumer payments.
Financial analyst Edem Kojo explained that the directive requires banks to withhold the VAT component and remit it to the government instead of relying on the GRA to pursue service providers for payment.
GRA Says Digital VAT Will Not Add Another 20%
Mr Sarpong stressed that consumers should not interpret the digital VAT collection system as an additional 20% charge on top of existing subscription prices. According to him, the tax is already embedded in the payments consumers make for the affected services.
The new arrangement is intended to provide a more efficient way for the government to collect the revenue due. He noted that the GRA currently receives VAT remittances from close to 92 companies and entities under the arrangement.
Their pricing is not expected to change as a result of the rollout. “Nothing will change in terms of pricing for those 92 merchants or entities,” Mr Sarpong stated.
The authority has also identified about 100 emerging entities that are not currently charging VAT. Mr Sarpong explained that these businesses would be brought into the system gradually, extending the tax collection framework to more digital service providers.
The rollout is therefore intended to improve compliance and collection from the growing digital services market without automatically increasing the amounts consumers already pay.
Digital VAT Applies to Services, Not Physical Goods
The Commissioner-General also clarified that the initial implementation of the digital VAT collection system covers services rather than physical products or tangible goods.
He explained that goods entering Ghana are already subject to applicable taxes, including duties and VAT, at the country’s borders. These taxes are calculated when products arrive through airports or seaports.
“The reason why we haven’t added products or goods is that the goods physically come to our borders, either through the airport by air or through the sea by ship”.
GRA Commissioner-General Anthony Kwasi Sarpong
Mr Sarpong explained that because the existing border procedures already account for the relevant taxes on imported goods, extending the new digital collection arrangement to physical products is not part of the initial rollout.
He indicated, however, that the GRA could consider including goods in a future phase. Under such an arrangement, consumers could present proof that the relevant taxes had already been paid when the goods arrived.
For now, the authority’s focus remains on digital services, where the collection of VAT from providers presents a different administrative challenge. The distinction means that consumers should not interpret the current digital VAT rollout as a new tax collection measure covering all products purchased online.
According to GRA Commissioner-General Anthony Sarpong, the initial system is specifically designed around services.
Banks to Withhold VAT and Remit Revenue
Financial analyst Edem Kojo offered an explanation of how the new arrangement would work for consumers paying for digital subscriptions. Mr Kojo noted that existing subscription receipts already contain a tax component added by service providers.
Under the new directive, banks would withhold the VAT amount and remit it to the government rather than leave the GRA to pursue the service providers directly. He illustrated the arrangement using a GH¢120 subscription payment, explaining that the amount includes a GH¢20 tax component due to the government.
“If you pay 120ghc for a subscription to YouTube, inherent in that figure was a 20ghc tax that was due to the government,” Mr Kojo explained. He added that, under the example, the service provider’s receipt would record GH¢100 from the 15th, while the bank would deduct and remit the GH¢20 VAT component.
“Your total payment remains 120ghc,” he emphasised. The example illustrates the distinction between the tax already included in a consumer’s payment and the mechanism through which the government collects it.
Rather than adding another tax charge to the subscription, the arrangement changes how the VAT component is withheld and transferred to the state.
GRA Targets Better Compliance in Digital Economy
The rollout comes as the authority seeks to improve VAT collection from digital service providers operating in Ghana’s expanding online market.
Mr Sarpong’s explanation places the emphasis on the collection mechanism, with the GRA seeking to bring additional service providers into the system while maintaining existing pricing arrangements for the 92 entities already remitting VAT.
The planned integration of approximately 100 emerging entities would extend the authority’s reach to businesses that are not currently charging VAT, according to the Commissioner-General. However, the rollout’s initial scope remains limited to services, with physical goods excluded because taxes are already assessed at Ghana’s entry points.
The GRA’s clarification is intended to address concerns about whether the directive will increase the cost of subscriptions and other digital services. Sarpong maintained that the system is designed to collect existing tax obligations more efficiently rather than impose an additional 20% charge on consumers.
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