Ghana has started enforcing a 20% tax on taxable cross-border digital services. This measure, supported by the research think tank CUTS International, aims to strengthen the nation's revenue base. The Ghana Revenue Authority (GRA) is collecting these taxes in real-time.
This 20% charge is not a new tax. It combines the existing 15% Value Added Tax (VAT), a 2.5% National Health Insurance Levy (NHIL), and a 2.5% Ghana Education Trust Fund (GETFund) Levy. The collection happens through participating payment gateways and digital platforms. This system improves the enforcement of taxes already required by law on digital imports.
This enforcement fits into Ghana's broader economic strategy to increase its tax-to-GDP ratio. By taxing digital transactions, the government can fund crucial social interventions. These include programs like the Free Senior High School (Free SHS) initiative. This move also helps reduce Ghana's reliance on borrowing from international capital markets.
Appiah Kusi Adomako, Director of the West Africa Regional Centre of CUTS International, stated, “A software purchase should not escape tax because the customer receives a download instead of a CD. As commerce moves online, tax collection must follow.” He emphasized that leaving digital imports untaxed would create a growing hole in Ghana’s revenue. CUTS International praised the GRA for including a dispute resolution framework for billing errors.
This policy addresses the shift in consumer spending from physical stores to online platforms. If tax collection does not adapt, a significant part of economic activity would avoid taxation. This would lead to a deficit in public finances. It also places an unfair tax burden on local businesses and citizens who comply with existing tax laws.
CUTS International highlighted examples like software, music, and games. Consumers now download these digitally instead of buying physical copies. The organization argues that digital delivery should not be a loophole for avoiding statutory taxes. This ensures that online purchases carry the same tax obligations as physical goods.
Enforcing digital tax compliance creates a level playing field for Ghanaian vendors. Local businesses that account for VAT should not be at a disadvantage. They compete against foreign digital suppliers selling similar products into the Ghanaian market. The revenue from digital consumption is vital for sustaining essential public services.
Appiah Adomako also observed, “Taxes are the subscription we pay to live in a civilised society. Government finances Free SHS and other social interventions through public revenue, including taxes.” He acknowledged that individuals and businesses might feel the cost. However, a broader tax base helps Ghana finance development.
CUTS called on banks to provide clear complaint reference numbers and fast-track refunds. They also urged the government to spend public funds transparently and prudently. This ensures public confidence in the new tax regime and its implementation.