Ghana is looking to increase revenue, and taxing customers on the foreign digital services they use—such as Netflix, YouTube, and WhatsApp—is one strategy.

On October 15, the country launched Real-Time VAT (RTVAT) that lets the Ghana Revenue Authority (GRA), the country’s taxman, collect value-added tax (VAT) on qualifying digital services when customers pay foreign providers through Ghana-issued cards, mobile money accounts, and other digital payment channels. 

The system applies to non-resident companies selling electronic services to customers in Ghana, including streaming platforms, cloud storage providers, software subscriptions, online advertising, and digital marketplaces.

Explain like I’m new here: This didn’t start today. Ghana has required foreign digital service providers to register for VAT since 2022. The GRA created an online registration and filing system for non-resident e-commerce businesses, requiring them to declare their Ghanaian sales and remit the taxes they collect. 

However, Ghana cannot send a tax officer to a provider’s office monthly to check whether the right VAT was paid. Under RTVAT, when a Ghanaian customer pays for an eligible foreign digital service using a Ghana-issued card, mobile money account, or wallet, the payment provider can identify the transaction, withhold the applicable tax, and send it to the GRA.

Why is Ghana doing this? The GRA said that as of October 14, about 92 non-resident digital service providers were registered on the tax collection portal, while about 100 others either failed to collect the required taxes or haven’t remitted them. The authority previously estimated that an automated collection system could raise more than GH¢2.5 billion ($213 million) annually, compared with roughly GH¢515 million ($44 million) a year it currently collects.

What changes for users? If your Netflix bill already includes Ghanaian taxes, the GRA said RTVAT should not make you pay them twice. However, if a foreign provider previously didn’t collect the required tax, your final bill could now rise by 20%. 

Zoom out: Banks, mobile money operators, payment service providers and other licenced payment processors handling these transactions must integrate with the RTVAT system. They must now correctly identify taxable transactions, collect and remit the right amount, and reverse the tax when refunds or chargebacks happen.