Anthony Kwasi Sarpong clarifies VAT collection on foreign digital services

The Commissioner-General of the Ghana Revenue Authority (GRA), Anthony Kwasi Sarpong, has clarified that the current measures surrounding Value Added Tax (VAT) on foreign digital services do not constitute a new tax or a rate increase. Addressing public concerns over potential rising costs for digital platforms, Sarpong emphasized that the authority is merely enforcing existing legislation passed in 2022. The standard VAT rate remains unchanged at 20%, ensuring that foreign service providers operate under the same fiscal requirements as local businesses.

To streamline this enforcement, the GRA is transitioning to the Sentinal system, an automated platform designed to collect VAT at the point of payment. Under this arrangement, banks and mobile payment operators will facilitate the collection during the transaction process. This shift is intended to simplify compliance for international companies that previously struggled with the administrative requirements of the Ghanaian tax system. While consumers may see VAT displayed separately during checkout or on receipts, the GRA maintains that there will be no additional financial burden on those who were already paying the tax through compliant platforms.

The primary objective of the new collection method is to create a level playing field for domestic digital entrepreneurs, who have historically faced a competitive disadvantage against foreign entities that were not effectively taxed. By utilizing the Sentinal system, the GRA aims to minimize revenue losses caused by non-compliance and boost the national treasury. Commissioner-General Sarpong encouraged the public and businesses to use official GRA channels for further inquiries, reaffirming the authority's commitment to transparency and fair market practices.