How does a value added tax work?

How does a value added tax work?

A value-added tax code works by using a flat tax rate to add an extra fee at each stage of a good’s production. If a country’s value-added tax rate is 10 percent, then the government gets to collect 10 percent of every transaction in the supply chain, from the exchange of raw materials to the final sale.

What is the new VAT rate in Ghana 2021?

19.25%
Therefore, the new rate for VAT in Ghana is 19.25% effective 1st May, 2021.

Who is a taxable person in Ghana?

Taxable Person is a person who is registered for the purposes of the VAT Act or is required to register under sections 6 to 16 of the VAT Act 2013, (Act 870).

How is Nhil and VAT calculated in Ghana?

Rates

1. Value Added Tax (VAT) – Standard Rate = 12.5%
2. National Health Insurance Levy (NHIL) = 2.5%
3. Ghana Education Trust Fund (GETFund) = 2.5%
4. COVID-19 Health Recovery Levy (COVID-19 HRL) = 1%

Who pays the Value Added Tax?

The seller charges VAT to the buyer, and the seller pays this VAT to the government. If, however, the purchasers are not the end users, but the goods or services purchased are costs to their business, the tax they have paid for such purchases can be deducted from the tax they charge to their customers.

What is VATable amount?

VATable sales are sales that your business will have to charge VAT on if it is registered for VAT. Most sales are subject to VAT at the standard rate, which is currently 20%. Some sales are subject to VAT at the reduced rate of 5%. Still others are zero-rated – which means they are subject to VAT but at 0%.

What is the current PAYE tax rate in Ghana?

25 percent
The Personal Income Tax Rate in Ghana stands at 25 percent.

Who must register for VAT?

You must register your business for Value Added Tax (VAT) if the total value of taxable goods or services is more than R1 million in a 12-month period, or is expected to exceed this amount. A business may also register voluntarily if the income earned in the past 12-month period exceeded R50 000.

What is the current VAT rate 2020?

This cut in the VAT rate from the standard rate of 20% will have effect from 15 July 2020 to 31 March 2021. These changes are being brought in as an urgent response to the coronavirus (COVID-19) pandemic to support businesses severely affected by forced closures and social distancing measures.