Dr Boako challenges government over new digital tax

Dr Gideon Boako is challenging the government’s digital VAT collection policy because it may create new costs for consumers using foreign online services. The government says the policy is not a new tax, but Boako argues that consumers will pay more when VAT is applied to transactions that were previously untaxed.

The policy broadens VAT collection to more foreign digital service providers. A student could pay for an online course, while a small business could buy software, subscriptions or social-media advertising. These transactions could now include the existing effective 20% rate, according to the GRA.

Boako says the important issue is the effect on people’s pockets, not only whether the tax already exists in law. He wants the government to explain how ordinary consumers, businesses and young entrepreneurs will be affected. The GRA says safeguards will prevent duplicate taxation where taxes were already paid.

Digital VAT is VAT charged on digital services consumed through online platforms. It matters because foreign providers can sell subscriptions, courses, software or advertising to consumers in Ghana. The policy seeks to bring more of those transactions into the tax base, even when the provider is based outside Ghana.

In general, a foreign provider records the customer’s location, adds the applicable VAT to the transaction and remits the tax to the relevant authority. A payment intermediary may also help identify or process the charge. The article confirms the policy’s broader aim, but it does not explain the GRA’s detailed registration, collection or remittance procedures.

The GRA says the applicable effective rate remains 20%. Dr Boako argues that applying VAT to previously untaxed purchases creates an additional financial obligation for consumers. The policy therefore affects both tax administration and the final prices paid for online services.

The GRA has stated that the effective tax rate on these services remains 20%. This figure matters because applying it to transactions that previously carried no VAT could raise the amount consumers and businesses pay for foreign digital services.

The 20% rate is a combined charge. It includes 15% VAT, a 2.5% National Health Insurance Levy and a 2.5% GETFund Levy. For example, a subscription or online advertising payment covered by the policy could attract all three components rather than VAT alone.

The government maintains that this is not a new tax because the relevant tax rate already exists in legislation. Dr Boako disputes that practical framing. He says consumers focus on the financial effect, especially when the tax is newly applied to services they previously bought without being charged it.

The policy could increase the final price of foreign digital services because VAT and related levies may be added to transactions that were previously untaxed. This matters for consumers who depend on online learning, entertainment or digital tools, and for businesses that advertise or operate online.

A student buying an online course could face the service price plus the effective 20% tax. A small business promoting a product on social media could also pay more for advertising. Similar effects could apply to subscriptions and business software if those services fall within the broadened collection policy.

The article does not state whether every provider will pass the full charge directly to customers. However, Dr Boako says the policy creates an additional financial obligation for affected consumers. He wants the government to explain the effects on ordinary users and young entrepreneurs who rely on digital tools to earn income.

Students and small businesses may face different tax treatment depending on whether they use foreign or local digital services. Dr Boako argues that extending VAT collection to foreign providers could add costs to services that previously escaped the charge, while comparable local offerings may be taxed differently.

For example, a student taking a course from a foreign provider could pay the course price plus the effective 20% rate. A student using a similar local service might face another tax treatment. Likewise, a small business buying social-media advertising from a foreign platform could incur an added cost that does not apply in the same way to a comparable local promotion.

The article does not provide a detailed comparison of local tax rules. It does show why Boako is concerned about fairness. He says the policy could affect students and small businesses unevenly, especially those with limited funds or heavy reliance on digital services.

Double taxation occurs when the same transaction is charged tax more than once. It matters because consumers could pay an online provider and then face another tax charge through a payment platform or another collection point. That would increase costs beyond the intended tax burden.

Dr Boako asked how the GRA would stop consumers from being charged twice. He also asked what procedures would be available to people seeking refunds. The concern is particularly relevant to payments made through mobile-money services, including MTN MoMo, Telecel Cash and AT Money.

The GRA has assured consumers that safeguards will be implemented. These safeguards are intended to prevent duplicate taxation when the applicable taxes have already been paid. The article does not explain the exact safeguards or refund process, so those details remain important as the policy affects consumers and businesses.

As a general tax principle, VAT is designed to tax consumption when people or businesses buy goods and services. It matters because the tax is collected through transactions rather than only from income or profits. In this case, the government wants digital transactions involving more foreign service providers included in VAT collection.

A consumer paying for a foreign online course, subscription or software service is consuming a service. If that transaction enters the VAT base, the provider or collection system applies the relevant tax and accounts for it. The article does not specify the GRA’s exact collection mechanism or explain every reason for broadening the base.

Broadening a tax base generally allows more consumption to be treated under the same tax framework. Here, the GRA says the existing effective rate is 20%, while Dr Boako focuses on the new cost for previously untaxed transactions. The debate therefore concerns both consistency and affordability.