![]() The First Schedule to the VAT Act provides a list of goods and services classified as exempt supply. A supply for the official use of any Commonwealth or Foreign Embassy, Mission, Consulate, or a permanent member of the diplomatic service exempted from payment of customs duties by Parliament.Ī supply is exempt when a consumer of the goods and/or services is not liable to pay VAT by law.Emergency relief items approved by the Parliament of Ghana.Raw materials imported by VAT-registered manufacturers in good standing with the Association of Ghana Industries.The VAT law relieves specified persons from payment of tax on specified goods purchased in Ghana and some taxable imported goods. These are goods and services that are taxable, but the law provides relief from payment of the applicable tax. The GRA penalizes tax payers for not disclosing zero-rated supplies in their tax returns. Note: You must report these supplies in the monthly VAT returns filed at the tax office. A supply of services consumed outside Ghana.Goods used as supplies on ship or aircraft traveling out of Ghana.Goods and services supplied to a Free Zones enterprise.The Customs division of GRA must certify these Goods exported from Ghana by a supplier.The reason for classifying exported goods and service as zero-rated supplies is to encourage exports.īelow are examples of transactions which attract zero tax: Export of goods and services are zero- rated supplies. The transfer of goods by an agent to the principal.Ī zero-rated supply is a taxable supply taxed at a rate of 0%.A supply of services by an employee to an employer is not a supply of services for Value Added purposes.These levies must also be charged at the time of invoicing, GET Fund 2.5% and NHIL Levy 2.5%.Īs an exception to the general rule, the following are not taxable supplies: The current rate of VAT on such supplies is 12.5%. The consumer of such goods and services must pay Value Added Tax. ![]() The general rule is, a supply of all goods and services in Ghana and goods and services imported into the country is subject to VAT. These are:Ī taxable supply is a supply of goods and services subject to VAT. ![]() The VAT Act specifies four main types of supply. Types of supply is a concept defined by the law to determine a) whether you are taxable and b) what rate of tax applies. For example, you buy a laptop for GHC 1500 and sell it for GHC 2500, the value added is GHC 1000. ![]() Value added is the difference between the price of product or service and the cost of producing it. It forms part of the final price the consumer pays for goods or services. VAT is a tax applied on the value added to goods and services at each stage in the production and distribution chain. By the end, you should understand the different types of supply, and how that affects the tax charged. In this post, we’re going to discuss the basics of Value Added Tax (VAT). ![]()
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February 2023
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