a)
To: Mr. Emilio Dito
Date: 6th February 2018
Subject: DISCUSSION POINTS ON THE BASICS OF THE VAT REGIME IN GHANA
We provide as detailed hereunder, our response to your request for information on the VAT regime in Ghana particularly, the basic VAT concepts relating to the issuance of a Credit Notes
(i) A Credit Note is issued by a VAT-registered person to cancel or amend a VAT invoice issued for a supply made, in the following circumstances:
Where the taxable person makes a supply and,

• the supply is subsequently cancelled in whole or in part.
• the nature of the supply is fundamentally varied or altered.
• the previously agreed consideration is for the supply is altered by agreement with the recipient of the supply, whether as a result of the offer of a discount or for any other reason; or
• the goods or services or part have been returning to the supplier,
  and where in addition to the above.
• the taxable person has issued a tax invoice to the recipient of the supply and the amount of tax shown on the invoice exceeds the amount of tax properly chargeable on the supply as a result of the subsequent event(s) referred to above.
  or.
• the taxable person has filed a tax return for the period in which the supply was made and accounted for an amount of Output tax that exceeds the Output Tax properly due on the supply as a result of the occurrence of any of the subsequent events indicated above.
  (6 marks)
  (ii) A VAT-registered person who properly issues a Credit Note to a customer for a supply made in a previous tax period is entitled to Deductible Input Tax in the amount by which the tax charged on the invoice issued or the Output Tax accounted for in the tax return filed for the previous period in which the supply was made, exceeds the amount of tax chargeable on the supply as a result of the changes or circumstances that occurred subsequently.

Illustration:
Value of supply in August 2017 = Ghc 10,000,00
VAT/NHIL due @17.5% = Ghc 1,750,00
Note. 40% of the supply is subsequently cancelled in November 2017; VAT/NHIL properly due as a result of the part-cancellation = Ghc 10,000,00 x 60%x17.5%
A Credit Note thus issued and:
Deductible Input Tax allowed as result of the part-cancellation = Ghc 1,750 – Ghc 1,050
= Ghc 700,00

Note: Where the VAT-registered person (i.e. Supplier) made the supply to a person who is not a taxable person, a deductible input Tax is not allowed unless the amount of the excess tax has been repaid, by the supplier to the recipient, whether in cash or as a credit against an amount owed to the taxable person by the recipient.

Thank you
Tax Consultant

b) Where the CG has reason to believe that:

• A person shall become liable for payment of an amount of excise duty, but that person is unlikely to pay the amount:
• A person other than a manufacturer enters for home use, goods that are excisable and represents that excise duty is charged on the goods entered:
• A manufacturer wrongly enters for exports or home use excisable goods, or wrongly applies the excise duty rates:
• A manufacturer fails to submit a tax return specified in the Excise Duty Act, 2014 (Act 878) or in Regulations:
• A return is incorrect or that a lawful excise duty has not been paid; or
• The CG believes that a person is required to be registered for excise duty but has failed to apply for registration and has been registered by the CG.