Same tax, collected when you pay: Bringing fairness to VAT on foreign digital services

Over the past week, many Ghanaians have asked a fair question: will paying for a streaming subscription, cloud storage or an online game soon cost more because of the introduction of a collection and monitoring system?

I understand why people are concerned. Digital services are now part of how we work, learn, run businesses and unwind, and household budgets are carefully managed.

The answer deserves to be stated plainly. This is not a new tax, and the rate has not changed. It is the same VAT, now collected when you pay.

VAT on digital services sold to Ghanaians by companies based abroad has been part of Ghana’s VAT law since 2022, following the amendment of the Value Added Tax Act, 2013 (Act 870), by the Value Added Tax (Amendment) Act, 2022 (Act 1082), and the Authority has been collecting it since then.

The combined rate remains 20 per cent: 15 per cent VAT, plus 2.5 per cent each for the National Health Insurance Levy and the GETFund Levy.

It is worth recalling that this rate came down, not up, effective January 2026, following the passage of the Value Added Tax Act, 2025 (Act 1151), which reduced the effective VAT rate from 21.9 per cent to 20 per cent. Nothing is being added to it now.

What is changing is how the tax is collected. Until now, the Authority has relied largely on the foreign companies themselves to declare their sales in Ghana and pass the VAT on to us.

About 92 of them are registered and paying. About 100 more have been identified as selling to Ghanaian customers without charging or paying the VAT the law already requires.

Enforcing compliance through self-declaration alone, against companies with no physical presence in Ghana, is slow and uncertain.

In view of these challenges, Parliament in July 2026 approved the implementation by the Ghana Revenue Authority (GRA) of a system that will efficiently collect VAT, beginning with digital services supplied by cross-border entities.

Under the new arrangement, run through GRA’s Sentinal® system, the VAT will be collected at the point the consumer pays, by the bank, mobile money operator or other licensed payment company handling the payment, and passed on to GRA. Connecting to GRA’s system is mandatory for those institutions.

For the customer, very little changes. There is no form to fill and no extra step. You continue to pay for and enjoy your services as usual, and each time you make a payment, you will receive an SMS or email confirming the transaction, so you can see exactly what you have been charged, including VAT.

There are, however, two things people will notice, and I would rather explain them now than have them discovered on a bank statement.

First, registered providers will now display prices without VAT, with the VAT added when you pay. A subscription may therefore show a lower listed price and a separate VAT amount at checkout.

This is the same VAT that used to sit inside the price, now shown openly. It is not an extra 20 per cent on top.

Second, customers of providers that were not charging VAT may now see it deducted for the first time. I will not pretend otherwise. But that is not a new tax. It is the existing law being applied evenly.

No one who is already paying VAT should pay it twice. Where VAT is wrongly charged, it will be refunded automatically. If it is not, the customer should notify the bank or mobile money provider from which the payment was made, keeping the SMS or email notification as a record. Where the matter is still not resolved, GRA’s official channels remain open.

The scope is deliberately narrow. VAT is collected at payment only when three conditions are met together: the payment is made with a Ghana-issued debit or credit card, mobile money account or digital wallet; the business selling the service is based outside Ghana; and the service is delivered online, such as streaming, cloud computing and online gaming.

Sending mobile money to family is not a payment to a foreign digital service and is not affected. Physical goods bought from abroad remain under Customs procedures.

Why does this matter? The first reason is fairness. A Ghanaian software developer, streaming platform or digital advertising agency must charge VAT on its services. When a foreign company offering the same service to the same customer charges nothing, our own businesses compete on uneven ground.

The same rules should apply to every business selling into the Ghanaian market, wherever it is based.

The second reason is the public purse. The Minister for Finance told Parliament this year that Ghana loses an estimated 60 per cent of its potential VAT revenue through non-compliance, and that sustainable revenue growth must come from stronger compliance and smarter administration rather than higher tax rates.

Collecting VAT on foreign digital services at the point of payment is a direct application of that principle. It asks those who are already obliged to pay to do so, rather than placing more weight on those who already comply.

Every cedi of tax already due that is properly collected is a cedi that does not have to be raised through new taxes or additional borrowing.

Collecting VAT at payment does not relieve the companies concerned of their obligations. Registered providers must still file their periodic VAT returns. The return accounts for what has been collected; it does not add a second tax.

This reform is one part of a wider modernisation of tax administration, alongside the Integrated Tax Administration System, the Publican AI Trade Solution at our ports and the Fiscal Electronic Device now being piloted.

The aim throughout is the same: that tax due under the law is collected on time, accurately and transparently, with every taxpayer treated consistently.

Public trust in the tax system depends on people understanding what they pay and why.

So let me close where I began. This is not a new tax, and the rate has not changed. You do not need to do anything differently. It is the same VAT, collected when you pay, so that it is collected fairly from every provider, local and foreign alike.

BY ANTHONY KWASI SARPONG

The writer is the Commissioner-General, Ghana Revenue Authority.

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