Ghanaians have been paying 20% tax on Netflix, Spotify and others since 2022 – GRA

The Director-General of the Ghana Revenue Authority (GRA), Anthony Kwasi Sarpong, has disclosed that Ghanaian consumers have been paying an effective 20% tax on several digital services, including Netflix, Spotify and other online subscriptions, since 2022.

He said the tax is not new but has been in force under Ghana’s tax laws, with the current changes aimed at improving its collection from foreign digital service providers.

Kwasi Sarpong made the clarification when he appeared before Parliament’s Public Accounts Committee (PAC) on Wednesday, October 14, amid public concerns over reports that banks would begin charging a 20% tax on digital subscriptions from Thursday, October 15.

“This law has been in our books since 2013. In 2013, when we passed our VAT Act, the law mandated GRA to be able to collect VAT on digital services, particularly the imported ones,” he told the committee.

The GRA boss explained that although the original law provided for taxation of imported digital services, it was difficult to implement because the foreign companies providing the services were not registered in Ghana.

He said an amendment passed in 2022 allowed non-resident digital service providers to register with the GRA without having to incorporate companies in the country.

According to him, about 92 foreign digital service providers have since registered with the Authority and are charging and remitting the applicable taxes on services consumed in Ghana.

“I [would] like to assure [you] that on Netflix, whatever you've been paying for Netflix since 2022 includes VAT. It is not visible to you, and that is not going to change,” he said.

The effective 20% rate comprises 15% Value Added Tax (VAT), a 2.5% National Health Insurance Levy (NHIL) and a 2.5% Ghana Education Trust Fund (GETFund) Levy.

The combined rate applies to taxable digital services supplied by non-resident providers.

The GRA has clarified that the new collection arrangement will not impose an additional 20% charge on transactions for which the applicable taxes are already being paid.

However, the Authority has identified about 100 additional foreign digital service providers that are not currently charging and remitting the required taxes, and consumers using their services could see the taxes reflected in their payments.