11.07.2024

Ghana: Implementation of Electronic VAT Invoicing System

The Ghana Revenue Authority has started rolling out Electronic VAT Invoicing System that will help businesses and GRA to obtain real time monitoring of VAT transactions.

Following the successful completion of the pilot phase, the first rollout phase is to be completed by the end of June 2024. The aim is to onboard large taxpayers. Phase Two is expected to commence in the next quarter till year-end with medium and small taxpayers in focus. The third and final phase will onboard all other VAT registered taxpayers.

Implementation ofVAT Invoice as Proof of Expense for Income Tax Purposes

The Commissioner General issued a directive in the last quarter on the need to obtain and retain VAT invoices as proof of expenses to qualify them as deductible. The implementation of this directive took effect at the beginning of this quarter.

Notwithstanding the above, expenses that do not require the issuance of VAT invoice or transactions from persons not required to register VAT, are allowable provided they meet the deductibility criteria stipulated in the Income Tax Act.

Application of VAT Flat Rate on Supplies of Estate Developers

In an administrative guideline issued, the Commissioner General has provided that in application of the amendment to the VAT chargeable on the taxable supply on immovable property for dwelling by an estate developer or immovable property for rental purposes, the COVID-19 Levy of 1% is applicable in addition to the flat rate of 5%.

However, such a person does not qualify to claim input tax on its purchases relating to that supply.

Ghana Revenue Authority Clarifies Status of Resident Individuals

The GRA has acknowledged recent concerns of the public on the tax status of individuals who earn income abroad and whether they are deemed by the Tax Laws as” resident individuals” for tax purposes.

The Authority specified that the definition of resident individual is vivid in the Income Tax Act 2015 (Act 896), Section 3(2) (a),103, and 111. By definition, a resident individual:

Is a citizen with a permanent home in Ghana residing in the country throughout the year.
Is present in Ghana for at least 183 days in any 12-month period that begins or ends within the year.
Includes government employees or officials posted Abroad.
A citizen temporarily absents from Ghana for not more than 365 continuous days who maintain a permanent home in Ghana.

In preparation of the tax rollout, the GRA has opened a special window for taxpayers to rectify their records to facilitate easier declaration and payment of taxes for taxpayers to report undisclosed incomes. All eligible individuals are encouraged to utilize the opportunity to regularize their tax affairs.

If you wish to discuss these topics, please contact:

WTS Nobisfields

Author

Theophilus Tawiah

Managing Partner

Ghana

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Article published in WTS Africa Quarterly Newsletter #3/2024

Recent tax developments in Africa

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