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Ghana Introduces New VAT Rules On Realtors

by Lorys Charalambous, Tax-News.com, Cyprus

13 October 2015


Ghana's Commissioner-General has issued a statement highlighting new VAT obligations for mortgage providers and operators in the real estate and construction sector.

Under the Value Added Tax Act, 2013 (Act 870), VAT should be levied on the sale of immovable property by an estate developer. Meanwhile, the Value Added Tax (Amendment) Act, 2015 (Act 890) obliges real estate developers to charge and account for VAT on taxable supplies of immovable property at a flat rate of five percent on the value of each taxable supply; and estate developers engaged in the sale or supply of immovable property are required to charge and account for VAT from October 1, 2015.

The statement says: "The sale of each unit of immovable property by an estate developer is taxable under the VAT law at a flat rate of five percent, calculated on the value of the unit of immovable property. All other taxable supplies/services made by estate developers, as defined by the VAT law, are taxable at the standard VAT/National Health Insurance Levy (NHIL) rate of 17.5 percent."

For contracts concluded between two or more parties before October 1, 2015, the terms of which did not include provisions relating to the tax, the supplier is required to recover the tax due on any taxable supplies made under the contract after October 1, 2015. Furthermore, where a contract concluded after October 1, 2015, does not include a provision relating to the tax, the contract will be deemed to include the tax and the supplier under the contract will account for the tax, the statement says.

The statement however highlights that Item 18 of the First Schedule of Act 870 (headed "Exempt Supplies") exempts the following supplies from VAT:

  • Immovable property, including land, attributable to a dwelling;
  • Accommodation in a dwelling;
  • Land used or to be used for agricultural purposes; and
  • Civil engineering public works, including roads and bridges.

"Dwelling" refers to any building, premises, structure, or any place which is not used for commercial purposes and which is used predominantly for residential purposes; and "Estate Developer" means a commercial establishment engaged in the business of the construction and sale of immovable property.

TAGS: Insurance | VAT tax authority guidance | tax | business | value added tax (VAT) | VAT legislation | law | tax authority | legislation | construction | Ghana | services | Health Insurance | Tax

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