VAT and the levies at the tax point

The rule

Under the Value Added Tax Act, 2025 (Act 1151), in force from 1 January 2026, VAT, the National Health Insurance Levy and the GETFund Levy are charged on the same base, and the COVID-19 Health Recovery Levy no longer applies. The system ships those rates with their effective dates, and the firm keeps them under Settings, Tax, so a change in the law is a change of setting, not of software.

How a document is computed

• Tax is computed per line, each line rounded to the currency's smallest unit, and then summed. It is never computed on the total and spread back.
• Agency disbursements, such as court filing fees paid on the client's behalf, sit outside the base.
• The rates used are the ones in force on the document's tax point, so a credit note against a 2025 bill uses 2025's rules.

Groups of supply and their treatment

Every tax group is classed by how the Act treats its supplies, and the class decides what the group may carry:

• Standard rated: taxed under the group's components (VAT and the levies) in force on the tax point. Only a standard rated group has components.
• Zero rated: taxed at nil, but still a taxable supply on the VAT return.
• Exempt: not taxed, and reported as an exempt supply.
• Out of scope: outside VAT altogether, and not reported.

Settings, Tax, Standard rated lists the standard groups, each showing the rates in force today, with the rates it has ended folded under Show earlier rates. A component marked Built in came with the system; it is closed with an end date rather than deleted. A standard group with no rate in force says No rates in force, because a bill under it would carry no tax. Exempt and out of scope lists the other groups in one register with what each treatment means on a bill. A group's treatment is chosen when it is added and can be changed until a posted document is taxed under it.

An example

Fees of GHS 10,000.00, photocopying of GHS 200.00 and a court filing fee of GHS 500.00 paid as agent:

With VAT at 15 per cent and each levy at 2.5 per cent, the tax on the base of 10,200.00 is 2,040.00, and the document totals 12,740.00.

Trying a calculation

Under Settings, Tax, Calculator, the calculator opens on a worked example to read. Press Start a calculation to use it, then enter a bill's lines as they would be billed: each with a description, its kind (a fee unless you say otherwise) and its amount. Choose the tax group, the tax point and the currency, and press Calculate, or Enter in an amount. The result names the rates it used and the date they were in force, gives the bill's net, the taxable base with what it leaves out, the total tax and the gross, and then each line with every levy at its rate. A line outside the base says so in place of its tax.

Choose who pays under Withholding to see what a payer withholds from the fees at the rate the firm keeps for them, and what the firm then receives. Change any input after calculating and the result is marked as out of date until you calculate again.

A firm not registered for VAT

Under Settings, Tax, Registration, the firm records whether it is registered and from when. A firm that is not registered computes no tax and states that it is not VAT registered.

Withholding tax

The firm's withholding rules, by kind of payer and service, are kept beside the tax rates for the day payments arrive. A payer withholds on the fees alone, never on a disbursement or on the tax.