HomeBusinessBusinessElectricity VAT: GRA clarifies decision to tax resident Ghanaians

Electricity VAT: GRA clarifies decision to tax resident Ghanaians

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The Ghana Revenue Authority (GRA) has clarified its decision to tax the foreign incomes of resident Ghanaians as replacement for the value-added tax (VAT) on electricity.

Earlier this year, the government introduced a VAT on electricity, but public backlash led to its abandonment, leaving a revenue gap of approximately GH¢1.8 billion.

In response, GRA on April 15 announced the decision to tax foreign incomes to make p for the revenue gap.

In a statement on Monday, April 22, GRA justified the decision, saying it is backed by the Tax Act 2015 (Act 896).

The statement explained individuals considered residents for tax purposes include citizens; with a permanent home in Ghana residing in the country throughout the year, present in Ghana for at least 183 days in any 12-month period that begins or ends within the year, government employees or officials posted abroad, etc.

In preparation for the tax rollout, the GRA “opened a special window for taxpayers to rectify their records.”

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Read the full statement below

The Ghana Revenue Authority (GRA) has noted concerns raised by the general public on the tax status of individuals who earn incomes abroad and whether they are deemed by the Tax laws as “resident individuals” for tax purposes.

In light of these concerns, it is important to clarify who qualifies as a resident individual for tax purposes.

The legal definition of a resident individual for tax purposes is grounded in the Income Tax Act 2015 (Act 896), Sections 3 (2) (a), 103, and 111.

Clarification of key details:

Individuals considered resident for tax purposes:

1. Are citizens with a permanent home in Ghana residing in the country throughout the year

2. Are present in Ghana for at least 183 days in any 12-month period that begins or ends within the year

3. Include government employees or officials posted abroad

4. Are citizens temporarily absent from Ghana for not more than 365 continuous days who maintain a permanent home in Ghana

To facilitate easier declaration and payment of taxes for resident individuals to report of undisclosed incomes, the GRA has opened a special window for taxpayers to rectify their records.

All eligible individuals are strongly encouraged to utilize this opportunity to regularize their tax affairs.

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