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Ghana's 2024 Budget Statement tax proposals passed into law
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Executive summary
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.
These amendments are:
- Value Added Tax (Amendment) Act, 2023, Act 1107
- Excise Duty (Amendment) (No.2) Act, 2023, Act 1108
- Stamp Duty (Amendment) Act, 2023, Act 1109
- Exemptions (Amendment) Act, 2023, Act 1110
- Income Tax (Amendment) (No.2) Act, 2023, Act 1111
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.
Detailed discussions
A. Value Added Tax (Amendment) Act, 2023, Act 1107
1. Flat rate on rental of commercial premises other than commercial rental establishments
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.
2. VAT withholding
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.
3. Deductible input VAT
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:
- The supply of the non-life insurance contract must be taxable.
- The payment should not relate to the supply of goods or services to the taxable person or importation of goods by the taxable person.
- Supply of the non-life insurance contract should not be charged at a 0% tax rate.
- The payment should not result from a supply of goods or services to other person where those goods are situated outside Ghana or those services are performed physically outside Ghana.
4. Exempt supplies
The First Schedule to Act 870 (exempt supplies) has been amended as follows:
Inputs for agricultural purposes
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."
Supply of printed matter and other materials
The following have been excluded from the list of items qualifying for VAT exemption under paragraph 10 of the First Schedule:
a. Imported
i. Textbooks
ii. Exercise books
iii. Newspapers
iv. Publications
v. Charts
b. Architectural plans and similar plans
c. Drawings
d. Scientific and technical works
e. Periodicals
f. Magazines
g. Trade catalogs
h. Price lists
i. Greeting cards
j. Almanacs
k. Calendars
l. Diaries and stationery
m. Other printed matter
Domestic transportation
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."
Real estate developer
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."
Non-life insurance
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).
Postage stamps
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.
Plant and machinery for automobile industry
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.
5. Zero-rated supplies
The Second Schedule to Act 870 (zero-rated supplies) has been amended to apply tax on the following supplies at the rate of 0%:
- Textiles manufactured locally by a local manufacturer who has been approved by the Minister of Trade and Industry until 31 December 2025
- Locally assembled vehicles under the Ghana Automotive Development Programme from 1 September 2022 to 31 December 2025
- Locally manufactured sanitary towels
B. Excise Duty (Amendment) (No.2) Act, 2023, Act 1108
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.
C. Stamp Duty (Amendment) Act, 2023, Act 1109
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.
D. Exemptions (Amendment) Act, 2023, Act 1110
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:
- The headnote before section 17 of Act 1083 has been amended to reflect the inclusion of fishing gear and related items to the Act. Thus, the headnote now reads as, "Personal Effects, Foodstuffs, Equipment for Trial & Fishing Gear."
- Section 19 of Act 1083 has been amended with the insertion 19A to read as follows:
Fishing gear
19A. Fishing gear imported for agricultural purposes and
a. Certified by the Minister responsible for Fisheries and Aquaculture Development, and
b. Approved by the Minister
are exempt from custom duties and custom taxes.
- Section 34 has been amended the interpretation of fishing gear to include "fishing float."
E. Income Tax (Amendment) (No.2) Act, 2023, Act 1111
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:
No. | Band | Rate of tax (%) | Old chargeable income (GHS*) | New chargeable income (GHS*) | Difference (GHS*) |
1 | First | Nil | 4,824 | 5,880 | 1,056 |
2 | Next | 5 | 1,320 | 1,320 | |
3 | Next | 10 | 1,560 | 1,560 | |
4 | Next | 17.5 | 36,000 | 38,000 | 2,000 |
5 | Next | 25 | 196,740 | 192,000 | (4,740) |
6 | Next | 30 | 359,556 | 366,240 | 6,684 |
7 | Exceeding | 35 | 600,000 | 600,000 |
* GHS refers to Ghanian cedi.
Contact Information
For additional information concerning this Alert, please contact:
Ernst & Young Chartered Accountants, Accra
- Isaac Sarpong
Ernst & Young Société d'Avocats, Pan African Tax — Transfer Pricing Desk, Paris
- Bruno Messerschmitt
- Alexis Popov
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
- Byron Thomas
Ernst & Young LLP (United States), Pan African Tax Desk, New York
- Brigitte Keirby-Smith
- Dele A. Olagun-Samuel
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.