The Government of Ghana has presented to Parliament, the Value Added Tax (Amendment) (No. 2) Act, 2017 (the Bill) to amend sections of the Value Added Tax Act, 2013 (Act 870). The purpose of introducing this Bill is to redefine the place of supply rules for telecommunications services, amend provisions related to the Value Added Tax (VAT) withholding agents, and to provide for other VAT-related matters.

The proposed amendments are:

• The place of supply rules have been revised as follows:
  • In the case of telecommunication service, it is the place where the facility or instrument for the emission, transmission or reception of the service in respect of which the invoice for the supply is issued or is to be issued, is ordinarily situated.
  • In the case of electronic commerce and telecommunications service defined under Sections 16(2)(a)¹ and (b),² it is the place where the effective use and enjoyment occurs.
  • In the case of supply recharge cards or other similar modes of recharging, it is the place where the product is supplied.
• According to the Bill, the Commissioner-General (CG) may in writing appoint a person as a VAT withholding agent for the Ghana Revenue Authority.
• The Bill provides that a VAT withholding agent shall withhold 7% of the taxable output value of standard-rated supplies from the payment to a registered VAT trader.
• The VAT withholding agent is also required to issue a Withholding VAT Credit Certificate in the form prescribed by the CG to the supplier when making payment for the standard-rated supplies.
• According to the Bill, one of the conditions required for the deduction of input tax in relation to supplies made in Ghana is that the taxable person must be in possession of the Withholding VAT Credit Certificate.
• The Bill also provides that the VAT withholding agent is required to file returns in the prescribed form with the Commissioner no later than the 15th day of the month immediately following the month to which the deduction relates. Further, the VAT withholding agent shall be required to pay the amount withheld for each period to the CG.
• The First Schedule of the VAT Act which provides for the exemptions has been amended to include the stake in the National Lotto organized by the National Lottery Authority as an exempt supply. In addition, betting in the form of lotteries has been excluded as a taxable activity.

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ENDNOTES

¹ According to Section 16(2a) of Act 870, "telecommunications services" are services that relate to the transmission, emission or reception of signals, writing, images and sounds of information of any nature by wire, radio, optical or other electromagnetic systems, including the provision of access, transmission, emission or reception.

² According to Section 16(2b) of Act 870, "electronic commerce" covers business transactions that take place through the electronic transmission of data over communications networks like the internet.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Ghana, Accra

• Robin McCone
  robin.mccone@gh.ey.com
• Isaac Sarpong
  isaac.sarpong@gh.ey.com

Ernst & Young Advisory Services (Pty) Ltd., Africa ITS Leader, Johannesburg

• Justin Liebenberg
  justin.liebenberg@za.ey.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

• Rendani Neluvhalani
  rendani.mabel.neluvhalani@uk.ey.com
• Byron Thomas
  bthomas4@uk.ey.com

Ernst & Young LLP, Pan African Tax Desk, New York

• Silke Mattern
  silke.mattern@ey.com
• Dele A. Olaogun
  dele.olaogun@ey.com
• Jacob Shipalane
  jacob.shipalane1@ey.com

Ernst & Young LLP, Pan African Tax Desk, Houston

• Elvis Ngwa
  elvis.ngwa@ey.com

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ATTACHMENT

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