VAT on Supply of Immovable Property

VAT ON THE RENTAL OF IMMOVABLE PROPERTY AND THE SUPPLY OF IMMOVABLE PROPERTY BY ESTATE DEVELOPERS

What is the purpose of Value Added Tax (Amendment) Act, 2023 (Act 1107) on the supply of immovable property?

It provides for a flat rate of tax on the supply of immovable property.

Which categories of taxpayers are covered under the amendment?

Estate developers
Supplier of immovable property for rental purposes

Who is an estate developer?

According to the Value Added Tax (Amendment) Act 2023, (Act 1107), It is a commercial establishment or an individual engaged in the business of the construction or renovation and supply of immovable property

What is the applicable rate of VAT and Levies charged on the supply of an immovable property?

The rate as provided for are;

1. 5% VAT on the taxable value
2. 1% COVID -19 Levy on the taxable value.

What is the threshold for VAT registration?

As per VAT Act 2013, (Act 870), the threshold is an annual turnover exceeding GH¢200,000.00

Who is required to charge VAT on the supply of immovable property?

All registered or registrable estate developers and suppliers of immovable property for rental purposes.

Can VAT be charged on Operational lease and sub-lease agreements?

Yes, VAT must be charged on leases and sub-leases

Is the VAT registered estate developer and a supplier of immovable property for rental purposes entitled to claim input tax?

No, if the estate developer is solely engaged in supply of immovable property.
Yes, if the VAT registered estate developer also engages in other taxable supplies other than the supply of immovable property which is subjected to standard VAT rate (15%).

Are there exemptions from VAT on the supply of immovable properties?

Yes, the supply of immovable property by a person other than an estate developer for a dwelling and agricultural purposes is exempt.

Are activities of property management liable to the VAT?

Yes, at the VAT standard rate of 15%.

What is the responsibility of a taxpayer who is an estate developer and is into the supply of immovable property?

The estate developer has the responsibility to:

Register for the applicable tax type including VAT,
Charge and account for the tax,
issue VAT invoice for all taxable transactions and
Maintain proper records, including contract documents and receipts.

Where an individual has two houses and decides to sell one, does he qualify to charge and account for the VAT?

No, if the individual is not engaged in the business of the construction or renovation and supply of immovable property

Will the supply of immovable property through barter arrangement be liable to the VAT flat rate?

Yes

If an estate is developed through joint venture arrangement, will it be liable to charge VAT on the supply of the immovable property.

Yes

Will a hotel establishment operating both the hotel and the supply of immovable property be liable for VAT?

Yes, the hotel business will be subjected to the standard rate. However, if the supply of immovable property is not a commercial rental establishment, it will attract VAT flat rate.

Is a supply of immovable property to a non – resident person subject to the tax?

Yes, at the flat rate of 5% VAT and 1% COVID -19 levy

Is civil engineering of private works, including private roads and private bridges subject to VAT?

Yes, at the standard rate of 15%.

Are agency fees subject to VAT?/h4>

Yes, at the standard rate of 15%

How do I file my returns?

Returns should be filed on the Taxpayer’s portal. It should be done on or before the last day of the month following the month in which the transaction was made.

What happens if I fail to charge or remit VAT on a real estate transaction or commercial rental?

Non-compliance will result in penalties, interest, and possible legal action by the Ghana Revenue Authority.

What is the effective date of implementation of the 5% VAT flat rate?

From 1st January, 2024

What is the VAT rate for the supply of storage or warehousing services?

Standard rate of 15% because it is not a supply of immovable property

Are construction services subject to VAT?

The supply of construction services is a taxable supply subject to VAT at the standard rate of 15%

What is the VAT rate for the supply of a storage facility or a warehouse which are immovable properties?

The VAT rate is 5% flat rate because these are immovable properties that are made available for rental purposes

At what point is the 5% tax due or applicable?

In line with section 39 (1c) of the VAT Act, 2013 (Act 870), VAT is due when the earliest of the following occurs:

How can I learn more or get more information on this tax type?

Contact any Ghana Revenue Authority Taxpayer Service Centre (TSC) or call the toll-free number 0800 900 110, WhatsApp on 055 299 0000 or 020 063 1664 or send an email to info@gra.gov.gh.

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