Ghana goes after Google, Netflix, Amazon with digital tax

By Jonas Nyabor
Posted on Thursday, 24 March 2022 18:12

The logos of mobile apps, Google, Amazon, Facebook, Apple and Netflix, are displayed on a screen in this illustration picture
The logos of mobile apps, Google, Amazon, Facebook, Apple and Netflix, are displayed on a screen in this illustration picture taken December 3, 2019. REUTERS/Regis Duvignau

Ghana is targeting digital players like Netflix, Alibaba, Amazon, Google and online betting platforms for taxes to raise additional revenue for its cash-strapped economy.

Effective 1 April 2022, the Ghanaian government will require all e-commerce and digital platforms without physical presence in the country to file tax returns and pay monthly taxes just as local businesses.

Pegged at a rate of 18.5%, the tax is expected to raise around ¢2.7bn ($372m) for the state in the first year.

The Ghana Revenue Authority, the agency responsible for the collection of the taxes, says it estimates collecting about ¢1.7bn from betting and gaming companies and the additional ¢1bn from platforms such as Google, Instagram, Tiktok, Facebook and others in the e-commerce space.

It warns that non-resident companies that fail to comply will be blocked from drawing payments from Ghana.

“We have built a compliance tool that will ensure that whether it is Google, Amazon or Netflix, you would have to comply. We have an arrangement with the Bank of Ghana to block payment to goods and service providers if they fail to comply with their tax obligations,” says Ammishaddai Owusu-Amoah, the commissioner general of the authority at the launch of the tax registration portal in Accra.

Ghana joins the others

Ghana joins South Africa, Algeria, Cameroon, Zimbabwe, Nigeria, Kenya that have already laid out plans for the collection of taxes from digital companies.

This is one of the country’s major moves to raise domestic revenue to fund its development amidst limited access to the international capital market.

Having ruled out the possibility of turning to the IMF for support, the government has narrowed down its options to expanding the tax net to capture more entities.

The revenue authority has consequently increased its tax mobilization target from the ¢57bn ($7bn) set in 2021 to ¢80.3bn ($11bn) for 2022 and the cash expected to be raised from non-resident business obligations will be a key contributor.

Digital marketing strategist, Stephen Nana Osei Boadi says that the idea of taking taxes from digital platforms is long overdue and admits that customer will ultimately bear the brunt of the tax.

“The imposition of the tax is in order. These companies are generating a lot of money from Ghana and need to pay reasonable taxes if these will not raise issues of double taxation… The companies could transfer the full cost to the consumer but some may also absorb the taxes if it’s marginal. A lot will depend on the reaction of the users of the platform,” he said.

As a Value Added Tax, it will ultimately be paid by consumers which could impact subscriptions and platform usage.

None of the affected companies have reacted publicly to the announcement yet, but Ghanaian consumers on social media have expressed mixed reactions.

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