Question Tag: Exempt supplies

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  • 3 Marks

PT – Nov 2021 – L2 – Q2d – Value-Added Tax (VAT), Customs, and Excise Duties

Explain what constitutes exempt supplies under the VAT Act.

What constitutes exempt supplies?

A supply is exempt when the consumer of the goods and/or services is not liable to pay VAT by law. The VAT Act specifically exempts the following items from VAT:

  1. A supply of agricultural and aquatic food products in a raw state produced in Ghana.
  2. A supply of specific live animals bred or raised in Ghana (e.g., cattle, sheep, goats, pigs, poultry).
  3. A supply of the following agricultural inputs: fishing equipment, boats, nets, and other exclusive items.
  • 5 Marks

AT – Nov 2017 – L3 – Q1a – Tax administration in Ghana

Distinguishing between zero-rated and exempt supplies under the VAT Act.

There has been misconceptions about the application of zero-rated supply and exempt supplies under the VAT Act. In order to help clear this misconception, distinguish between zero-rated supply and exempt supplies under the VAT Act 2013, (Act 870).

(5 marks)

  • Exempt supply: The supply of goods and services specified in the First Schedule is an exempt supply and not subject to tax. Examples include “commercial rental establishment”, “dwelling”, “estate developer”, “education services”, “financial services”, “medical services”, and “medical supplies”. A supply of goods or services is not an exempt supply if that supply is subject to tax at a rate of zero percent under section 36.
  • Zero-rated supply: A supply is taxable at a zero rate if specified in the Second Schedule. Examples include “Exports from this country”, “Foreign-going aircraft”, “Free zone”, and “Free zone enterprise”. Taxable persons applying the zero rate must retain acceptable documentary proof to substantiate entitlement to the zero rate.

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