Foreign Universities Hit With 21.9% Tax

By slapping them with a staggering 21.90percent tax, the government of Ghana is effectively sealing the door on higher education for Ghanaian students who reside in the country but take online courses from foreign universities.

This means that students will have to pay more in terms of tuition to acquire recognition and certificates that were denied to them by Ghanaian institutions for a variety of reasons, including the absence of such programmes, strict entry requirements, lack of expertise, inflexibility of the Ghanaian educational programmes, and lack of infrastructure.

After registering with the Ghana Revenue Authority (GRA) for the collection of VAT (Value-Added Tax) and the levies, some universities have notified their continuing students and new students via email about the new fees.

One of these foreign institutions is London University. The breakdown was as follows: 15% Value Added Tax, 2.5% National Health Insurance Levy, 2.5% Ghana Educational Trust Fund Levy, and 1% COVID 19 Health Recovery Levy.

The plight of the students is already exacerbated by the instability of the local currency, as most of these institutions charge tuition in foreign currencies, primarily the pound sterling and the United States dollar, and require students to pay an additional 21.90 percent as VAT and other levies.

The school explained that "the VAT and levies apply to services purchased online, which includes online education" and that "as a result of this legislation in Ghana, the University will be required to add the levies and then the VAT, resulting in an effective rate of 21.90% for new and continuing students residing in Ghana on all payments made from 20 June 2023 onwards."

"We understand that this tax will be an unanticipated additional expense for you, so we are writing to inform you in advance of any adjustments to program fees. Our program fees are reviewed routinely in accordance with our terms and conditions. In this case, we must pass along a statutory fee over which we have no authority.

"The breakdown of the 21.90% by VAT and each levy will appear on your student record next to each fee levied. Please note that the VAT and other taxes and fees are subject to change.

It is unclear what arrangement applies to foreign universities with campuses in Ghana, but it is likely that they are regarded as service-providing businesses and are therefore required to pay VAT and other levies. These costs are automatically passed on to their Ghanaian pupils in the form of tuition.

Below is the message sent by the University of London to one of its students regarding the new fees.

Dear ……

We are writing to inform you that our fees for Ghanaian students will change on June 20, 2023.

In order to comply with Ghanaian law, the University of London has registered with the Ghana Revenue Authority for the accumulation of VAT (Value-Added Tax) and the following levies: admission fees, parking fees, and parking fines.

· Value Added Tax (15%)

2.5% National Health Insurance Tax (NHIL)

Ghana Educational Trust Fund Levy 2.5 percent

Covid 19 Health Recovery Levy (CHRL) one percent

The VAT and surcharges apply to services purchased online, which includes online education.

As a result of this legislation in Ghana, the University will be compelled to add the levies and then the VAT to the effective rate of 21.90percent for all payments made to new and continuing Ghanaian students beginning on 20 June 2023.

We recognize that this tax represents an unanticipated additional expense for you, and as a result, we are writing to inform you of upcoming fee adjustments. Our program fees are reviewed routinely in accordance with our terms and conditions. In this case, we must pass along a statutory fee over which we have no authority.

On your student record, the breakdown of the 21.90% by VAT and each fee will appear alongside each fee levied. Please note that the VAT and other taxes and fees are subject to change.