23 January 2024 Ghana's 2024 Budget Statement tax proposals passed into law
Ghana's Parliament has enacted or amended five laws (together, "the Acts") affecting individual and business taxpayers. These Acts were enacted as part of the various fiscal measures introduced under the 2024 Budget Statement and Economic Policy (the 2024 Budget). For further information on the 2024 Budget, please refer to EY Global Tax Alert, Ghana issues Budget Statement and Economic Policy for the 2024 Financial Year, dated 27 November 2023.
As no specific date was provided for their commencement, the gazette notification date is the effective date. Despite this, the Commissioner-General of the Ghana Revenue Authority issued a public notice requiring taxpayers to comply with effect from 1 January 2024.
A taxable person who makes a taxable supply of immovable property other than for accommodation in a dwelling or in a commercial rental establishment is required to account for the tax at a flat rate of 5% on the value of the taxable supply. Real estate developers who make taxable supply of immovable property are also required to account for the tax on the value of the taxable supply at a flat rate of 5%. For these categories of persons, input tax incurred on raw materials are not deductible with respect to the supply of immovable property. This implies that those supplying immovable property must account for input tax incurred on their raw materials and other inputs as part of their cost of production. An appointed withholding agent who fails to withhold VAT and remit to the Commissioner-General (CG) of Ghana Revenue Authority (GRA) by the 15th day of the month following the month at issue is liable to pay the VAT that should have been withheld plus a 30% penalty on that amount. If the withholding agent pays the VAT directly to the CG for an amount that should have been withheld from another person, the withholding agent is entitled to receive an equal amount from the payee or the person entitled to the payment from which the VAT is required to be withheld. Under section 47 of the Value Added Tax Act, 2013, Act 870 (as amended), a person may be appointed to withhold VAT on behalf of the GRA's CG and remit the withheld tax to the CG by the 15th day of the month following the month at issue. Provisions relating to the deductibility of input tax under section 48 of the Value Added Tax Act, 2013, Act 870 (as amended) have been amended. A person engaged in the supply of a non-life insurance contract may recover or deduct input tax equal to the tax fraction of any amount paid during the tax period to indemnify another person under a non-life insurance contract. The following conditions must be satisfied, however, to benefit from the input tax deductibility:
Paragraph 6 has been rephrased to narrow the scope of inputs eligible for VAT exemption where the input is utilized for agricultural purposes. Consequently, the opening phrase of paragraph 6 has been revised to read "A supply of inputs for agricultural purposes" as opposed to the previous version, which stated "A supply of the following agricultural inputs." The following have been excluded from the list of items qualifying for VAT exemption under paragraph 10 of the First Schedule:
Paragraph 15 has been rephrased to state "A supply of domestic transportation of passengers by road, rail or water, except the supply of haulage or the rental or hiring of passenger and other vehicles." Subparagraph (a) of paragraph 18 has been revised to make the supply of immovable property, including land used or intended for use for the purpose of a dwelling, excluding the supply of immovable property by an estate developer, exempt from VAT. Real estate developer is defined as "a commercial establishment or an individual engaged in the business of construction or renovation and supply of immovable property." The provision of non-life insurance, previously considered part of exempt financial services, has been excluded from the list of exempt financial services under paragraph 19. This implies that persons who supply non-life insurance products are now required to account for the tax on their supplies. With non-life insurance being no longer exempt, persons providing the services may be eligible to recover input tax as discussed under section 3 of this Alert (Deductible input VAT). A supply of postage stamps issued by the Ghana post other than for expedited services or for philatelist purposes has been excluded from the exemption list. Importation of plant and machinery designed specifically for use in the automobile industry as well as kits by an automobile manufacturer registered under Ghana Automotive Manufacturing Development and electric vehicles for public transportation are exempt from VAT under paragraph 27. The Second Schedule to Act 870 (zero-rated supplies) has been amended to apply tax on the following supplies at the rate of 0%:
This amendment has increased the excise duty on cider beer to align with the excise duty rate on beer, reduced the excise duty on plastics, and expanded the coverage of the excise duty on plastics to imported plastic packaging and for related matters. The rates in the First Schedule to Act 689 have been revised upward. Persons intending to conclude contracts or instruments chargeable with the duty must account for the additional costs arising from the increased rates. This amendment to the Exemptions Act, 2022 (Act 1083) grants a waiver of custom duties and customs taxes in respect of the importation of fishing gear intended for agricultural purposes and for related matters. The amendments are as follows:
This amendment to the Income Tax Act, 2015 (Act 896) revises the rates for income tax for individuals as provided in subparagraph (1) of paragraph (1) of the First Schedule to Act 896. The chargeable incomes of individuals are to be taxed as follows:
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