VAT in Ghana is a tax that is applied to the value added to goods and services at each stage in the production and distribution chain. How to calculate VAT in Ghana is not clear to most people. VAT is part of the final price a consumer will pay for the services or products. The calculation of VAT is different in each country. Interestingly, in some states, it is called Goods and Services Tax or GST.
VAT was first introduced in Ghana in 1995, to replace both sales and services tax. The implementation failed in 1995, and it was re-introduced in 1998, where it was embraced and implemented. The new VAT calculation in Ghana is 12.5 percent which is calculated on the value of the taxable supply of services and goods or the cost of import.
What is the new VAT rate in Ghana?
The standard VAT rate is 12.5 percent. The rate was restructured from the previous 15 percent to 12.5 percent in August 2018. Ghana split the 2.5 percent National Health Levy from the combined current VAT rate.
The 2.5 percent National Health Levy is now combined with the Education Trust Fund Levy of 2.5 percent. The value of taxable supply includes:
- The sales amount
- GetFund Levy (2.5 percent)
- NHIL (2.5 percent) and all other taxes excluding the value-added tax itself
How to calculate VAT in Ghana
Calculating VAT in Ghana has become easy to follow using the Ghana VAT calculator. This has made it possible to engage in the free online calculation for goods and services which are subject to value-added tax in Ghana.
The calculator permits fast VAT calculations and more comprehensive VAT calculations with multiple items.
Once you have completed your calculations, you can print the document. You can also email the VAT document and use it for future reference.
Value-added tax is arrived at multiplying the product or service price by the correct VAT rate. Here are the steps on how to calculate your VAT.
VAT = a x (b / 100)
- a = The product/service that is subject to VAT in Ghana.
- b = The relevant rate of VAT in Ghana associated with the product/service.
Who is required to register for VAT?
There are specific requirements that must be met before registering for VAT in Ghana. Keep in mind that the current percentage of VAT is 12.5 percent. Therefore, if you are a person making taxable supplies of goods, you ought to register if you meet the following requirements:
- 200,000 GHS at 12-month or less period
- If there are reasonable grounds that the threshold of GHS 200,000 will be met at the end of any given month.
It is mandatory for persons making taxable supplies of services to register. There is no limiting threshold when it comes to taxable supplies of services. However, despite the above requirements, a taxable person shall register if:
- Their turnover is GHS 150,000 at the end of any duration of 3 months.
- There are rational grounds that supplies made and to be made will surpass the GHS 200,000 threshold during the period of the following nine consecutive months.
One is required to file their VAT monthly. This should be due by the last day of the following month to which the returns relate. You can access the VAT returns form for download and submit them upon completing filing. The GRA VAT forms are accessible on their official website for easy access.
With the above information on how to calculate VAT in Ghana, you can be sure of making the correct fillings on time. Ghana continues to be one of the tax-friendly nations.
Yen.com.gh highlighted on 28th April how to calculate Income tax in Ghana 2020. Income tax in Ghana is classified into five major classes which determine how much Ghana employee is supposed to pay to the government as income tax.
Tax calculation in Ghana is done either on a monthly basis or on yearly intervals. The taxation year in Ghana ends on 31st December every year. The procedure of taxation used in Ghana is very simple, short, and precise which makes it easy to calculate income tax for someone’s disposable income.