CUTS Welcomes VAT Collection On Cross-Border Digital Services And Urges Fair Treatment Of Distance Learning Students On Overseas Programmes

A leading research and public policy think tank CUTS International, Accra, welcomes the implementation of real-time tax collection on taxable cross-border digital services as a necessary step towards protecting Ghana’s revenue base and ensuring fair competition. CUTS also commends the Ghana Revenue Authority (GRA) for the dispute resolution arrangements for wrongful deductions, while urging Government to review the treatment of tuition for recognised foreign distance learning programmes.

The combined charge commonly described as “20% VAT” comprises 15% VAT, the 2.5% National Health Insurance Levy and the 2.5% Ghana Education Trust Fund Levy. Real-time collection does not introduce a new tax on these services. Collection through participating payment providers improves enforcement of existing tax obligations on qualifying digital services. The use of an online payment channel alone should never determine tax liability. Exempt supplies must retain their exemption.

Digital delivery must not erode the tax base

As purchases move from physical products to electronic delivery, Ghana’s tax administration must follow the underlying consumption. Otherwise, a growing share of spending would escape collection, leaving a widening revenue gap and placing more pressure on businesses and consumers already meeting their obligations.

Microsoft Office illustrates the point. A customer purchasing a genuine Microsoft Office CD from a VAT-registered local retailer paid VAT as part of the taxable sale. The same customer now downloads software or pays for a Microsoft 365 subscription online. Electronic delivery changes the distribution method. Collecting tax on the taxable digital purchase applies the consumption tax principle to the modern form of the product.

“A software purchase should not escape tax because the customer receives a download instead of a CD. As commerce moves online, tax collection must follow. Leaving taxable digital imports outside effective collection would create a growing hole in Ghana’s revenue base,” said Appiah Kusi Adomako, Esq., Director, West Africa Regional Centre of CUTS International.

Similar changes have occurred with music albums and films once bought on CDs or DVDs and now accessed through paid streaming services. Video games once purchased on discs now arrive through downloads and subscriptions. Antivirus software once sold in boxed packages now renews online. In each case, the relevant comparison is between taxable supplies serving similar needs, subject to the applicable legal exemptions.

Effective collection also supports fair competition. Ghanaian suppliers accounting for VAT should not lose customers because competing foreign suppliers avoid collecting the same tax on comparable taxable services. A broader, fairly administered tax base reduces unequal treatment between businesses selling into the same market.

Revenue must support public services and fiscal stability

“Taxes are the subscription we pay to live in a civilised society. Government finances Free SHS and other social interventions through public revenue, including taxes. Individuals and businesses will feel the cost of this implementation, but a broader tax base helps Ghana raise its tax-to-GDP ratio, finance development and reduce dependence on borrowing from international capital markets,” Mr. Adomako said.

CUTS stresses the matching duty on Government to spend prudently, reduce waste and account publicly for revenue. Stronger collection supports fiscal stability when accompanied by sound expenditure management. Banks and suppliers should disclose the service price, statutory taxes and bank charges separately so customers understand each deduction.

Wrongful deductions require prompt redress

CUTS commends the GRA’s provision for addressing wrongful charges through participating banks and payment providers. “A tax system earns public trust when errors are corrected quickly. The GRA deserves commendation for including a resolution process. Banks must make complaints easy to submit, give customers reference numbers and refund wrongful deductions promptly,” Mr. Adomako said.

CUTS urges the GRA to publish clear complaint channels, resolution deadlines and an escalation route for unresolved cases. Customers should retain invoices and transaction records. Banks and foreign suppliers must coordinate collection so a customer does not pay Ghanaian VAT twice on the same supply.

Distance learning requires equal treatment

CUTS is concerned about applying the combined charge to tuition for recognised foreign distance learning programmes while comparable qualifying education supplied by approved institutions in Ghana benefits from VAT exemption. The fairness of the policy must reflect the nature of the education and the recognition of the provider, rather than the location of its teaching platform.

The University of London provides a concrete example. Its detailed Ghana tax notice states the University has registered with the GRA and lists 15% VAT plus two levies of 2.5% each, producing a combined 20% charge on payments from students resident in Ghana from since 2022. This is collection under Ghanaian requirements, rather than a separate UK tax on Ghanaian students.

“Two students living in Ghana and pursuing comparable recognised qualifications deserve fair tax treatment. Charging one student because the university delivers the course from abroad, while exempting comparable tuition supplied locally, raises a serious question of equity. Education policy should support access to skills,” Mr. Adomako said.

Distance learning enables students to pursue qualifications while working and meeting family responsibilities in Ghana. Higher tuition costs risk excluding learners unable to afford overseas residence or travel. Recognised degree and professional programmes need separate consideration from general commercial content subscriptions.

CUTS calls on the Ministry of Finance, the GRA and the Ministry of Education to clarify the current exemption rules and establish a transparent route for recognising qualifying foreign distance learning programmes for equivalent treatment. Where legislation requires amendment, Government should pursue the necessary change. Any relief should use clear accreditation criteria and cover the relevant levies as well as VAT.

The GRA should also reconcile supplier collection with bank collection, including payments to universities already charging Ghanaian taxes. Any duplicate or otherwise wrongful deduction must be refunded. CUTS supports effective collection on taxable digital consumption and urges Government to apply the same commitment to fairness when reviewing education charges.