What began as an effort to improve tax collection has turned into a public controversy over a tax the Ghana Revenue Authority (GRA) says was already in place.
A senior GRA official, speaking to The High Street Journal, has attributed the confusion surrounding the reported 20% tax on Netflix, Spotify and other international digital services to a miscommunication by a commercial bank.
According to the official, the bank’s notification left customers believing the government was introducing a new 20% tax, when the intention was to change how existing taxes are collected.
The controversy followed a notification from a commercial bank informing customers that a 20% tax would apply to qualifying international digital payments from October 15, raising concerns about higher subscription costs.
The GRA subsequently clarified that the tax was not new. The 20% comprises 15% Value Added Tax (VAT), 2.5% National Health Insurance Levy (NHIL) and 2.5% Ghana Education Trust Fund (GETFund) Levy.
The authority said about 92 foreign digital service providers already collect and remit VAT, while another 100 have been identified as not doing so. Customers using services whose providers have not been collecting the applicable taxes could therefore see an increase in what they pay.
The new real-time VAT collection system is intended to improve compliance and ensure taxes due on digital services are properly collected. The GRA has assured consumers that the system will neither introduce a new tax nor increase existing rates. It added that customers who already pay the applicable taxes should not face additional charges on the same transactions.
