I have had people enquire about what specific items/goods/services or transactions would be affected by the 20% VAT on cross-border transactions.
Here is what I can think of.
To be VATable the following three conditions must be met:
– that the payment instruments is issued by Ghana. Example, bank card, MoMo, or digital wallet,
– that Merchant must be non-resident,
– that the service is supplied electronically.
*What is Affected*
*1. Video and Music Streaming / Subscriptions*
– Netflix, Spotify, Disney+, Showmax, beIN Sports, HBO Max, Apple TV, Amazon Prime Video, Apple Music, YouTube Premium, iCloud+, Google One
*2. Productivity, Software and Collaboration*
– Zoom, Microsoft 365, Google Workspace, Adobe Creative Cloud, Canva Pro, CapCut Pro, Salesforce, Dropbox, Slack (Photoshop), etc.
*3. Cloud Infrastructure and Hosting*
– Amazon Web Services (AWS), Google Cloud, Microsoft Azure, DigitalOcean, web hosting, domain-related digital services
*4. AI and Cybersecurity Tools*
– ChatGPT Plus, Gemini Pro, Claude, other AI subscriptions, McAfee, NordVPN and other VPNs
*5. Digital Advertising and Marketing*
– Google Ads, Meta Ads (Facebook/Instagram), TikTok Ads, LinkedIn Ads, X Ads. These ones affect badly small businesses and young individuals (students, musicians, bloggers, influencers, etc) boosting posts
*6. Online Gaming*
– PlayStation Plus, Xbox Game Pass, Apple Arcade, Steam, Roblox, gaming in-app purchases
*7. E-Learning and Online Marketplaces*
– Coursera, Udemy, LinkedIn Learning (Kindly note that qualifying education institutions licensed by Ministry of Education is exempt, but commercial platforms like these are treated as taxable digital services).
*8. Online Travel, Ride-Hailing and Hospitality Platforms*
– Booking.com, Agoda, Airbnb booking fees, Uber, Bolt
*However, note this Important nuance.*
Although the actual hotel room outside Ghana should generally be outside Ghana VAT, the *platform/booking fee* charged by the foreign site _is_ a digital service and will attract VAT. GRA is still clarifying this split.
*9. App Store Purchases*
– Apple App Store, Google Play Store paid apps and subscriptions
These are not all.
For compliant platforms that are already charging the VAT-inclusive price, this is not a new charge. However, if the platform was NOT charging before (e.g. the over a 1,000 and more to be roped in), you will see your cost go from e.g. GH¢100 to GH¢120.
*Payment channels affected:* Ghana-issued Visa/Mastercard debit/credit cards and Mobile Money – MTN MoMo, Telecel Cash, AT Money, plus digital wallets.
*Does the VAT apply to only intangibles?*
“GRA says the system applies strictly to intangible digital services and subscriptions. Physical goods imported through international e-commerce sites continue to go through normal customs borders.”
That is to say that
Amazon physical goods will not be VATable. Such goods should ideally attract customs duty at the port rather. Amazon digital ( Kindle eBook, AWS) will rather be VATable.
*But the inhereht challenge is real.*
Since deduction is at source by the bank, banks don’t see your cart to know when it is a physical good or intangible good.
They only see for instance $25 paid to Amazon.
Is that a $25 physical book or $25 Kindle eBook? Both come from Amazon.
If GRA listed the Merchant ID (MID) of Amazon broadly in their Merchant Category Codes (MCCs) the bank will deduct 20% even on your physical book. That will be *double taxation*. You will pay 20% VAT via bank now, plus customs duty when it arrives at Tema.
Note that it is MIDs and MCCs that help to differentiate the category of digital services – tangible or physical.
GRA says it has solved this by whitelisting only specific Amazon verticals e.g. Amazon Web Services, Prime Video, Kindle Store and not Amazon.com Retail.
But the challenge is that in practice, many merchants use one payment gateway for both.
*What happens if you are wrongly deducted?*
This is where GRA has not provided clarity yet.
In theory:
– You should get an SMS from the bank showing the split.
– If it was a physical good, you will need to apply for a refund/reversal with your bank and GRA, showing proof it was a physical import and that you will pay customs
That is cumbersome, which is why my core argument about new burden stands.
*So in short* the Bank would be able to know your purchase from Amazon is physical only if GRA does not include the MID in the GRA digital services list. If GRA mistakenly puts the physical retail MID of Amazon on the list, then yes, you will be wrongly charged 20% at point of payment, and you will have to fight for a refund.
