Ghana’s Budget Statement and Economic Policy for 2022 Financial Year: What changes to expect for VAT?

On 17 November 2021, Ghana’s Minister for Finance and Economic Planning presented the 2022 Budget Statement and Economic Policy (the 2022 Budget) to the Parliament. The proposal of  changes for VAT incude:

• extending  VAT relief to local textile manufacturers for additional two years
• reviewing the existing VAT Flat rate scheme in the year 2022
• implementing VAT for the gaming industry 

Key aspects relating to tax 

• The Government will introduce the Electronic Transaction Levy (E-Levy) at the rate of 1.75% to be charged on all electronic transactions covering mobile money payments, bank transfers, merchant payments and inward remittances. The Levy will be borne by the sender except inbound remittances which will be borne by the recipient. Further, transactions adding up to GHS100 or less per day or GHS3,000 (approximately) in a month shall be exempt from the Levy. The Levy will be implemented on 1 February 2022, consequently, the industry members are expected to configure their systems to implement the policy by the appointed time. 

• The Government will extend the duration of value added tax (VAT) relief to local textile manufacturers for additional two years (2022 to 2023) to consolidate the gains achieved from introducing the relief and drive expansion of the industry. 

• The Government will review the existing VAT Flat rate scheme in the year 2022. Thus, the VAT Flat rate scheme of 3% will be restricted to retailers of goods with annual turnover of GHS200,000 to GHS500,000. Currently, the VAT Flat rate of 3% applies to both wholesalers and retailers of goods. According to the Minister, this policy is intended to address the inequalities that domestic producers of local substitute face vis-à-vis importers of similar products. Wholesalers of goods will now be required to charge and account for VAT at the standard rate of 12.5%. 

• The Gaming Commission’s implementation of the Value Added Tax (VAT) for the gaming industry to enhance work processes, monitoring and revenue generation. 

• The temporary benchmark discount on certain imported goods and vehicles will be reviewed to ensure that the policy aligns with current development needs to protect the environment, local industry, strengthen public safety and support public health. 

• Road tolls on all public roads and bridges will be zero-rated effective from the date of approval of the 2022 Budget to ensure free vehicular movement, improve productivity and reduce environmental pollution caused by emissions from vehicles around tolling points. 

• The Government will pay closer attention to persons engaged in mining of salt as a part of the broader mining sector. Further, the Government will partner with the private sector to introduce digital systems to monitor their activities and provide revenue assurance. 

• Advanced Cargo Manifest and Advanced Passenger Information (APIS) will be introduced as well as a self-clearance system where individuals can make direct application for clearance of imports without the services of a Customs House Agent. 

Source: The Budget Statement and Economic Policy of the Government of Ghana for the 2022 Financial Year