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VAT Withholding

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GRADomestic TaxTax TypesVAT Withholding

Withholding of VAT

The Commissioner-General has appointed some persons as VAT withholding agents.

VAT withholding agents are required to withhold from payments for standard rated supplies 7% of the taxable output value for VAT purposes, i.e. the taxable value inclusive of NHIL and GETFL, and issue a Withholding VAT Credit Certificate at the time of payment.

Returns

Registered businesses are generally required to submit monthly returns showing:
  • VAT charged on supplies,
  • NHIL and GETFL charged on supplies,
  • The taxable value of supplies sold that were exempt or relieved from VAT,
  • VAT incurred on the purchase of goods and services, and
  • The net VAT payable or credit.

VAT, NHIL and GETFL returns and payment (if any) are due by the last working day of the month after the month to which the returns relate. E.g. June returns are due by the end of July. 

VAT, NHIL and GETFL on imported goods are paid when the associated duties are paid. The return and payment of VAT, NHIL and GETFL on imported services are due within 21 days of the month following the month in which the services were imported. 

VAT withholding returns are filed by the 15th day of the following month to which the returns relate and tax withheld is paid by the due date.

Refunds

Businesses can apply for VAT refunds in accordance with the provisions of the relevant VAT legislation. Refund claims must satisfy relevant conditions. 

Please refer to Section 50 0f the Value Added Tax Act, 2013 (Act 870) for relevant Refund conditions..

Penalties

There is a comprehensive system of penalties and interest payable for:
  • Incorrect declaration of VAT, NHIL and GETFL;
  • Late submission of returns;
  • Late payments; and
  • Infringements of the provisions of the VAT laws.

Offences and Sanctions

Some monetary penalties resulting from non-compliance are given in the table below:

Offence Sanctions
Failure to register Up to twice the amount of tax on taxable supplies until the application is filed
Failure to issue (proper) tax invoices Up to GH¢1,200, plus the higher of GH¢500 and triple the amount of tax
Late filing of VAT return GH¢500 plus an additional GH¢10 per day
Making a claim for a refund which you are not entitled to Twice the original refund request, plus interest
Late payment of tax 125% of the Bank of Ghana monetary policy rate, compounded monthly, and applied to the amount outstanding
General penalty Up to three times the amount of tax involved

Impact of Withholding Tax on the Withholding VAT Scheme

VAT Withholding agents will continue to withhold at the time of payment 7% of the taxable value (the base on which VAT is computed) of all local taxable supplies made by a standard rated taxable person/supplier, and the difference of 5.5% of the taxable value, along with the taxable value, will continue to be paid to the taxable person /supplier.

The withholding VAT agent will continue to issue to the supplier withholding VAT certificate showing the amount of tax withheld. These Certificates are to be used for purposes of showing as proof of advanced payment of both the VAT and the levies.

The VAT registered taxpayer who has made supplies and has suffered withholding VAT will continue to file both their VAT and levy returns and account for these imposts in accordance with the provision of the VAT Act, 2013, (Act 870), NHIL and GETFund, Act respectively to the Ghana Revenue Authority.

Withholding VAT agents will continue to file withholding VAT returns by the 15th of the month immediately following the month to which a return relates and make payments of VAT withheld to the Commissioner – General.

Relevant VAT downloads

click below to download a VAT doc
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