Dr. Gideon Boako
The Member of Parliament (MP) for Tano North, Dr. Gideon Boako, says the implementation of the 20% Value Added Tax (VAT) policy by the Ghana Revenue Authority (GRA) on cross-border digital services imposes an additional burden on Ghanaians.
In a write-up on the new digital services framework by GRA, Dr. Boako said expanding the VAT base to cover foreign digital service providers that previously did not charge the tax would increase the cost of services for consumers and businesses, particularly young entrepreneurs who depend on digital platforms to promote their products and services.
He said that although the legal framework for VAT already exist, extending its application to transactions that previously did not attract the tax would create an additional financial obligation for affected consumers despite the Authority’s explanation that it is not a new tax.
He said, “GRA’s explanation that ‘we are not introducing a new tax but we are just putting a mechanism to collect an existing tax’ is clever grammar, but bad economics. What GRA has actually done is broaden the base of VAT to cover transactions you never paid VAT on before. That, by definition, is a new tax to you.”
“Taxpayers are concerned about the economic incidence on their purse/pocket and not the legal regimes of taxes. This is legally not a new tax but economically a new tax,” he stated.
Dr. Boako also cited figures attributed to the GRA Commissioner-General, Anthony Kwasi Sarpong, who indicated that 92 foreign companies had registered and were charging VAT, while the Authority had identified more than 100 additional Foreign Service providers that had not previously been charging the tax.
He said reports that more than 1,000 entities could eventually be brought under the arrangement suggested that the policy would affect a wider range of digital services, adding that platforms such as Netflix, Spotify, Canva, CapCut, Zoom and Google Workspace among others could become more expensive for users who previously did not pay VAT on their subscriptions or transactions.
The MP acknowledged that broadening the tax base could help government mobilise additional revenue, but maintained that the authorities should be transparent about its implications for taxpayers.
Dr. Boako compared the additional charge to the abolished Electronic Transfer Levy (E-Levy), stating that it could disproportionately affect young entrepreneurs who use mobile money to pay for online advertising and business services.
He further raised concerns about possible double taxation, asking what measures the GRA had put in place to help consumers obtain refunds where Foreign Service providers also charged sales taxes, while urging the authorities of GRA to acknowledge the financial implications of the policy rather than rely solely on the argument that the tax already existed in law.
Dr. Gideon Boako’s comment comes in the wake of the introduction of the GRA’s Real-Time VAT framework for qualifying cross-border digital services.
Elsie Appau-Klu, Technical Advisor to the Commissioner-General of the Ghana Revenue Authority, said the framework collects existing VAT at the point of payment through participating financial institutions where the 20% charge comprises 15% VAT, a 2.5% National Health Insurance Levy and a 2.5% Ghana Education Trust Fund (GETFund) Levy.
By Ebenezer K. Amponsah