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October 24, 2022
2022-6015

Ghana enacts various amendments to tax laws introduced in 2022 Mid-year Budget Review Statement

  • The Parliament of Ghana enacted tax law amendments as part of the various tax measures introduced by the Government in the 2022 mid-year Budget Review Statement.”

  • This Alert summarizes the key aspects of the amended Acts.

Executive summary

The Parliament of Ghana has enacted the following tax law amendments:

  • Penalty and Interest Waiver Act, 2022, Act 1081

  • Value Added Tax (Amendment) Act, 2022, Act 1082

  • Income Tax (Amendment) Act, 2022, Act 1084

These Acts were enacted as part of the various tax measures introduced by the Government in the 2022 mid-year Budget Review Statement (the 2022 Budget Review). For background on the 2022 Budget Review, see EY Global Tax Alert, Ghana issues 2022 Mid-year Budget Review Statement, dated 9 August 2022.

This Alert highlights the key aspects of the amended Acts.

Detailed discussion

These Acts were enacted in line with the various tax measures introduced by the Government in the 2022 mid-year Budget Review to improve the Government’s fiscal outlook and increase revenue collection.

The Acts were published in the Official Gazette on 12 September 2022. As the Acts did not set forth effective dates, they came into force on the date of publication, i.e., 12 September 2022.

Penalty and Interest Waiver Act, 2022, Act 1081

The deadline for applying for the penalty and interest waiver in respect of accumulated tax arrears for previous years up to 31 December 2020 has been extended to 31 December 2022.

See EY Global Tax Alert, Ghana enacts various tax amendments introduced in 2021 Budget, dated 13 April 2021 for additional information on the conditions, scope and application process for the waiver.

Value Added Tax (Amendment) Act, 2022, Act 1082

The Value Added Tax (VAT) amendments are as follows:

Upfront payment by unregistered importer

A person who imports taxable goods but is not registered is required to make, in addition to the penalty to be paid, an upfront payment of 12.5% of the customs value of the taxable goods. A person may recover the upfront payment made after the person registers and files a return.

Unregistered, nonresident persons who provide telecommunication services or electronic commerce

An unregistered, nonresident person who provides telecommunication services or electronic commerce to persons for use or enjoyment in the country, other than through a VAT-registered agent shall register and submit a return to the Commissioner General (CG) not later than the last day of the month immediately following the month to which the return relates, whether or not tax is payable for the period, and pay the tax due to the CG by the same day that the return is due. A nonresident person who contravenes a provision of the VAT Act and Regulations made under the Act is, in addition to any other penalty imposed under the VAT Act or Regulations made under the Act, liable to a restriction of access in the country until the person fulfils the obligations under the VAT Act and VAT Regulations. The Act defines “digital service" to include:

  • Social networking

  • Online gaming

  • Cloud services

  • Video or audio streaming

  • Digital marketplace operations

  • Online advertisement services

“Electronic commerce" is defined in the Act to include a business transaction, including a digital service, that takes place through the electronic transmission of data over a communication network such as the internet. "Telecommunication services" include services that relate to:

  • The transmission, emission or reception of signals

  • Writings, 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

  • Political, social, cultural, artistic, sporting, scientific or entertainment broadcasts, or events

Issuance of tax invoice or sales receipt

A taxable person is required to issue a tax invoice through a Certified Invoicing System (CIS) and to ensure that the CIS of the taxable person is integrated into the invoicing system of the CG. The CG may access the CIS of a taxable person to ensure compliance with the provisions of the VAT Act. A taxable person, upon issuing a tax invoice, is required to retain a copy of the invoice in sequential identifying number order. The CG may authorize a taxable person who makes a taxable supply to issue a sales receipt instead of a tax invoice in accordance with the conditions and procedures specified in Regulations under the VAT Act. A taxable person is required to issue only one tax invoice or sales receipt for each taxable supply. Where a recipient who is a taxable person has not received a tax invoice, the recipient may, within 48 hours after the date of the supply, obtain a copy of the invoice from the CIS of the taxable person. A taxable person is required, within 24 hours, to inform the CG and ensure that the CIS of the taxable person is restored online and accessible by the CG where the CIS of a taxable person goes offline or is inaccessible by the CG. Where a recipient who is a taxable person has lost a tax invoice for a taxable supply, the recipient may obtain a copy of the tax invoice from the invoicing system of the CG.A person who:

  • Issues a false tax invoice or sales receipt

  • Fails to issue a tax invoice or sales receipt

  • Fails to issue a tax invoice through a CIS

  • Tampers, manipulates or interferes with the proper functioning of a CIS

  • Fails to integrate the CIS of the taxable person into the invoicing system of the CG or

  • Fails to re-connect the CIS of that person to the invoicing system of the CG

 is, in addition to the penalty for failing to issue a tax invoice, liable to pay a penalty of an amount of not more than five hundred Ghana Cedis (GHS500) or three times the amount of tax involved, whichever is higher.

A taxable person is required, within one year after the coming into force of this Amendment, to comply with the provisions of this section. An extension of time may be granted by the CG up to a period not exceeding three months where one is unable to comply with the provisions of this section within one year after the coming into force of this Act.

Place of supply of a digital service

The place of supply of a digital service is the place where the service is supplied, used or enjoyed in the country if any two of the following circumstances exist:

  • The recipient of the service is a resident person.

  • The payment, including mobile money, credit card, debit card or bank account, for the supply of a digital service originates from a payment platform in the country or a registered or authorized financial institution as provided for under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

  • The recipient of the supply of a digital service has either a business, residential or postal address, internet proxy address or phone number in the country; and the service is received on a terminal located in the country, including a computer, tablet, mobile phone or similar device.

Other provisions

  • A nonresident person who provides telecommunication service or electronic commerce and registers does not qualify for deductible input tax for the supply of a digital service. The CG may, however, determine the procedure for the deduction of input tax by a resident person who uses or enjoys a digital service from a nonresident person.

  • A supply of locally assembled vehicles under the Ghana Automotive Development Programme from 1 September 2022 to 31 December 2023 has been included as a zero-rated supply.

Income Tax (Amendment) Act, 2022, Act 1084

The quarterly income tax installment payment required of certain categories of persons1 in Paragraph 14 of the Sixth Schedule to the Income Tax Act, 2015, Act 896 (as amended) which was suspended for the first and second quarters of 2022 has been extended to the third and fourth quarters of 2022.

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

Ernst & Young Chartered Accountants, Accra

Ernst & Young Société d’Avocats, Pan African Tax – Transfer Pricing Desk, Paris

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

Ernst & Young LLP (United States), Pan African Tax Desk, New York

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Endnotes

  1. Category A: Retail traders, susu collectors, drinking and chop bar owners, bakeries, business centers, estates and accommodation agents.

Category B: Dressmakers and tailors, hairdressers, beauticians and barbers, artisans including masons, carpenters, plumbers, electricians, tilers, steel benders and laborers, hiring services other than vehicle hiring, freelance photographers who make a living out of photography other than operating in a photo studio or a specific location.

Category C: Butchers, Individual undertakers, corn millers and other millers, charcoal and firewood vendors, vulcanizers and alignment operators, auto technicians, shoes and equipment repairs, traditional healers.

 
 

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