
When it comes to taxes, especially taxes on imported vehicles, Ghana could be labelled as the headquarters of high taxes/duties. You may feel dizzy just by looking at the list of duties imposed on imported vehicles. With an imported car to Ghana, one would have to pay at least twenty-one (21) different types of taxes.
In February 2024, a friend imported a 2017 Toyota RAV4 Station Wagon, with an engine capacity of 2.5 liters (cubic capacity 2500), into Ghana. We will use this to illustrate how much taxes/duties were levied by the Ghanaian authorities.
Ghana government valued the 2017 Toyota RAV4 at US$13,450.00. According to Kelly’s Blue Book of the US, considering the condition of the car, that car is worth US$9,000. At the exchange rate of US$1 to GHC12.1239, the cedi value of the vehicle per the Government of Ghana was GHc163,066.46. Based on the vehicle value of GHc163,066.46, the total duty paid on the 2017 Toyota RAV4 was GHc92,945.22. At the February 2024 exchange rate, the duties paid, calculated in dollars, amount to US$7,666.30. That is a duty of about 57% on the value of the car, as determined by the Government of Ghana.
Now, let’s look at the types of duties paid:
Duty | Amount (GHc) |
Import Duty | 17,623.41 |
Import VAT | 30,823.35 |
Processing Fee | 0.00 |
ECOWAS Levy | 881.17 |
Upfront payment by VAT unregistered | 22,029.26 |
Vehicle Certification | 0.50 |
Vehicle Examination Fee | 1,762.34 |
Network Charge | 652.27 |
Network Charge VAT | 102.73 |
Network Charge COVID-19 Health | 6.52 |
Ghana Shippers Authority SNF Fee | 9.00 |
Import NHIL | 4,846.44 |
Network Charge NHIL | 16.31 |
1% Withholding Tax on Import | 1,762.34 |
GHS Disinfection Fee | 424.34 |
MoTI e-IDF Fee | 5.00 |
Special Import Levy (2%) | 3,524.68 |
Ghana Export-Import Bank (EXIM) Levy | 1,321.76 |
Ghana Education Trust (GET) Fund Import | 4,846.44 |
Network Charge GET Fund Levy | 16.31 |
African Union Import Levy | 352.47 |
COVID-19 Health Recovery Levy | 1,938.58 |
Total | 92,945.22 |
According to the government of Ghana, it is fair to pay US$7,666.30 as duty on a car valued at US$13,450.00. By the time the Ghanaian importer has cleared their car, it has cost them at least US21,116 ($13,450 + duty of $7,666.30), not counting the shipping costs and clearing agent fees. Thus, a car that a Canadian or an American will presumably own for US$13,450, assuming the Ghana government’s valuation is right, will cost a Ghanaian at least US$21,116 to own. And if this vehicle had been imported by a car dealer, instead of the consumer directly, the dealer would add their other operating expenses like shipping cost, clearing agent fees and profit, raising the cost of the vehicle even higher for the consumer.
Let’s consider a few of the taxes. VAT (value added tax) is levied three times. One of them is ‘Upfront payment by VAT unregistered’ which for the 2017 Toyota RAV4 was GHc22,029.26. It is stated at the website of the Ghana Revenue Authority (GRA) that, “Some importers, though required to register for VAT purposes, are currently not in the VAT net. Such importers, apart from paying import VAT at importation, do not charge the tax when they supply goods on the domestic front.” GRA went on to note that, “To ensure compliance, the VAT (Amendment) Act, 2022 (Act 1082) was enacted to impose an upfront payment of 12.5% on the customs value of taxable goods at all ports of entry, imported by persons who are required by law to register for VAT, in addition to import duties and taxes.”
From the above, my understanding is that when one sells an imported vehicle, they are supposed to impose VAT on the buyer. The government does not trust that those not registered for VAT purposes will charge VAT on behalf of the government when the imported vehicle is sold. Consequently, importers not registered for VAT purposes are charged the potential sales VAT when they clear their vehicles at the port. If this interpretation is true, then anyone who imports vehicle into Ghana for their personal use should not be subjected to the tax labelled ‘Upfront payment by VAT unregistered.’
On the website of GRA, it is stated that there are exclusions to the ‘Upfront payment by VAT unregistered.’ Exclusion number 3 is “Imported taxable goods valued below the threshold of GHS200,000.00.” Thus, imported goods valued below GHc200,000.00 are not affected by the ‘Upfront payment by VAT unregistered.’ As you can see above, the GRA determined the value of the 2017 Toyota RAV4 to be GHc163,066.46 which is below the threshold of GHC200,000.00 yet it imposed an ‘Upfront payment by VAT unregistered’ tax of GHc22,029.26.
Importers are levied ‘Network Charge NHIL’ and ‘Import NHIL.’ NHIL stands for National Health Insurance Levy which goes towards financing public health insurance for Ghanaians who sign on. We are sure every importer is willing to contribute toward the success of the healthcare scheme so there is nothing wrong with imposing that tax on importers. However, there are some taxes that are questionable. For example, four years after Covid 19, Ghanaian importers are still levied Covid tax two times – ‘COVID-19 Health Recovery Levy,’ and ‘Network Charge COVID-19 Health’ – on imported goods. In addition, importers are also levied ‘Network Charge,’ and ‘Network Charge VAT.’ There is a questionable tax known as ‘1% Withholding Tax on Import.’ Withholding tax for who and what? I have been at the Tema Port several times and seen containers cleared straight out of the port without disinfecting them however, the government charges a ‘Disinfection Fee.’ Well, maybe the containers are disinfected before they are offloaded. Another questionable tax charged by Ghana is the “Special Import Levy (2%).” What is special about an import levy? Or is it the vehicle that is labelled special? For the 2017 Toyota RAV4, the importer paid GHc3,524.68 as a special import levy.
Obviously, the duties paid on imported vehicles are too many and high. No country has ever taxed her citizens to prosperity. It is hoped that the new Mahama government will revisit and rationalize the tax system to make it economically viable and reasonable to Ghanaians.