Introduction

The Value Added Tax (VAT) of Ghana is a tax on general consumption expenditure levied as per the Value Added Tax Act, 1998 (Act 546) and the Value Added Tax Regulations 1998, (L.I 1646). VAT is levied at every stage of production and distribution of goods as a percentage charge based on assessable value that is added by the value additions done by each dealer. It is also imposed on goods imported into Ghana.

The collection of VAT commenced in Ghana from December 30, 1998 by replacing the Sales and Service tax collected by Customs Excise and Preventive Service (CEPS) and Internal Revenue Service (IRS) respectively. The VAT collected is paid into the Consolidated Fund as per the provisions of the VAT Act.

Another form of general tax on consumption expenditure is National Health Insurance Levy (NHIL). It is imposed under the National Health Insurance Act, 2003 (Act 650). The NHIL is imposed on supply of goods, services and imports. It acts as a source of money for National Health Insurance Fund established under the National Health Insurance Act.

Under the VAT Act and Regulations all Registered persons have to file The VAT & NHIL Return. It is a monthly return showing details of VAT/NHIL transactions for the calendar month. The excess of output tax remaining after off-setting the input tax is payable to the Department while filing the return.