General Terminologies

Input Tax

It is the VAT/NHIL paid:

• On taxable purchases made for resale

• On purchase of office equipment for use in the business

• As Telephone bills of the business enterprise

• As fees for services of accountants and solicitors.

Output Tax

It is the tax charged on taxable sales.

Tax Rates

The two rates of taxes levied are standard rate and zero rate. The tax rates are bifurcated as:

• Standard Rate: VAT - 12.5% and NHIL - 2.5%

• Zero Rate: VAT and NHIL at 0%.

The VAT and NHIL is chargeable on import of goods and services. The export of taxable goods and services are considered as zero rated supplies.

Taxable Turnover

It is the total value of taxable supplies made by a business entity.

Exempt Supplies

The levy of VAT and NHIL is exempt on:

• Foodstuffs like rice, millet, cassava, yam, guinea corn, plantain, vegetables and meat produced in Ghana and sold in their raw state.

• Agricultural and fishing inputs.

• Petrol, diesel and kerosene.

• Essential drugs approved by the Ministry of Health.

• Transport fares – land, sea and air.

• Educational services approved by the Ministry of Education.

• Electricity consumed for Domestic purposes.

• Water excluding distilled and bottled water.

• Printed matter like books, newspapers, atlas, charts, maps and music.

Zero Rated Supplies

Zero rated supplies are taxable supplies with a tax rate of zero percent. Zero tax rate is applicable on:

• Exports.

• Goods shipped as stores on ships or aircrafts leaving the territories of Ghana.

• Locally produced textbooks and exercise books.

• Locally manufactured agricultural machinery or implements.

TIN

Tax Identification Number (TIN) is the Registration Number given by the department to the dealer at the time of Registration. This needs to be quoted at all required places where the registration details are to be provided.

Tax Invoice

This is the approved VAT/NHIL invoice issued for taxable supplies to a Registered person. This invoice needs to be produced for the claim of input tax credit by the purchasing dealer.

Taxable Person

This term is used to identify a dealer who is registered either under Voluntary Registration or Compulsory Registration under the VAT Act. Taxable persons include Sole Proprietor, Partnership, limited liability company, government institutions and non-profit organizations.