VAT ACT 870 in Ghana

Gaining more insight into VAT: Which activities attract VAT?

Built Staff

It has been said that “ignorance of the law is no excuse”. Many people have fallen victims of various laws and suffered numerous repercussions. Often upon investigation, it is realized that such people could have easily prevented those unpleasant moments by equipping themselves with knowledge of laws.

In Ghana, the Ghana Revenue Authority has had to sanction some businesses and individuals with tax penalties because these businesses and people either did not do at all what they should have done or did so but had some irregularities inherent in them.

The purpose of this article is to assist readers to gain more insight into the VAT Act 870 with particular focus on highlighting some activities that attract VAT. This is what the Act calls taxable activity.


In explaining taxable activity, Act 870, identifies the following key issues:

  1. Fully or partly in Ghana

The activity so undertaken could be fully within the boundaries of Ghana or partly in Ghana and partly in another country.

  1. Pecuniary profit

Pecuniary means something that is financial or monetary in nature. Thus, the activity could be one that yields returns in monetary terms or other equivalent non-monetary forms. It adds that there should not only be the fact that the profit involves the supply of goods or services but also has the intention to involve the supply of goods or services.

  1. Supply of goods or service for consideration

Additionally, the activity could be a supply of goods or rendering of service for consideration (payment in return for goods or services provided).


Some activities that attract VAT are enumerated below as indicated in Act 870:

  1. A local authority or unincorporated association or body

The supply of goods or services by these to others attract VAT. For example, if Zoomlion (waste management firm) supplies dustbins to say, Accra Metropolitan Assembly, VAT will be paid.

  1. Supply of information or similar service

The raw materials of some firms is information. VAT will also be paid in a situation where there is the supply of information to such businesses. It must be added that processing of data also attracts VAT. For example, the supply of information by Google to say MTN will attract VAT.

  1. Supply of employees

There are instances where employee services are outsourced instead of establishing in-house units for such services. Supply of staff also attracts VAT. If Deloitte supplies staff with tax expertise to GRA to assist with tax assignments, VAT will be paid.

  1. Leasing and letting out of goods for hire

Just as there are occurrences of sale of goods, there are also occasions of leasing or letting out of goods. Leasing involves allowing another party to use a property for a period in return for periodic payments for the use of the asset. Giving of goods for hire will also give rise to VAT.

It is respectfully submitted that these are just a few of the activities that will lead to the payment for VAT. Readers are advised to visit VAT Act 2013, Act 870 for more activities that also attract VAT.

Staying tax compliant, getting all the tax information you need and making all the tax decisions you wish to can be very costly, time consuming and daunting. Why don’t you get the experts to help you so as to afford you room to focus on your core operations while making the best out of your tax situations and most importantly achieving your business goals and objectives. Built Accounting gives you what you need when it is needed, while keeping costs to the barest minimum and giving you and your business the freedom to focus on making things work. Survival is essential. When it comes to managing your business’s accounting, tax, payroll and finances, there is no reason to stress. Contact Built Accounting via email ([email protected]) or call 030 397 4832 for all your business accounting solutions.


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