VALUE ADDED TAX (VAT) AND

NATIONAL HEALTH INSURANCE

LEVY (NHIL)

KEEPING RECORDS & ACCOUNTS

Public Notice 4 (PN 4)

1

Issued by:

THE VAT SERVICE

P. O. BOX 17177, ACCRA.

Location
INTERNAL REVENUE SERVICE
HEADQUARTERS ANNEX,
MINISTRIES AREA, ACCRA

For more information, contact other VAT Service Offices

throughout the country.
2

A BRIEF GUIDE FOR THE VAT/NHIL REGISTERED PERSON ON THE KEEPING OF

RECORDS AND ACCOUNTS
If you are registered for the Value Added Tax (VAT), you are obliged to charge and account for
both VAT and the National Health Insurance Levy (NHIL) at the same time. You must keep
records of all the supplies you make and the supplies you receive, as well as a summary of
VAT/NHIL paid or charged for each tax period covered by your VAT/NHIL returns. The
summary is called a VAT/NHIL account and is useful for meeting your obligations under the law.
This booklet tells you about these records and how to keep them.
(1)

Does everyone have to keep the same records?

No, every one does not have to keep the same records. There are however a number of
records which are fundamental and therefore similar for all VAT-registered businesses.
You can probably adapt your present records to include the VAT and NHIL
requirements. The most basic record you need to keep is the TAX INVOICE (VAT/NHIL
INVOICE) but other business records may also be kept to enable you account for
VAT/NHIL at the end of each month.

(2)

What is a Tax Invoice?

Whenever you supply taxable goods or services to another person, you must give him a
document showing certain information about what you are supplying. This document is
called a tax invoice and must be furnished at the time of the supply. It is available in
the form of a VAT/NHIL invoice, available for sale at all VAT Service offices throughout
the country, other than the Head office.
Most businesses in Ghana already issue invoices and other forms of receipts as normal
business routine. Registered businesses are however required to issue the
Commissioners VAT/NHIL invoice for their taxable supplies. The Commissioner may
authorise some registered businesses to issue their own computer-generated
invoices on application, subject to certain specified conditions. Such own computergenerated invoices must conform to the details of a tax invoice as specified in the VAT
laws (S.19 of Act 546 and Reg. 19 of LI. 1646).
Some other businesses may be authorised by the Commissioner to operate the special
retail scheme, in which case they will be entitled to issue special (approved) retail or
cash register receipts for taxable supplies made. Such persons are however obliged to
issue the Commissioners VAT/NHIL invoice at the request of a customer who is also
registered for VAT.

(3)

Why are Tax Invoices Important?

If your customer is registered for VAT, he may be able to get back as input tax, the tax
(i.e. VAT/NHIL) you have charged him. All registered businesses can re-claim the VAT/
NHIL paid on taxable purchases and expenses, provided they are used to make taxable
sales. However, your customer and other firms can only reclaim the tax if they have a
valid tax invoice to support the transaction S. 24 (1b). In the same way, you can only
get back the VAT/NHIL you have been charged by your suppliers if you have tax
3

invoices from them. The only valid invoice for input tax claim is the Commissioners VAT/
NHIL, or an approved own computer-generated tax invoice.
Furthermore a VAT/NHIL invoice must be issued as evidence that the tax has been
charged on the supply. You must keep all VAT/NHIL invoices that you receive from your
suppliers and copies of all VAT/NHIL invoices that you issue to your customers as part
of your business records/documents.
For further information on Input and Output Tax, refer to Public Notice 5 (PN5 The Ins
and Out of VAT/NHIL).
(4)

Only a Registered Person can issue a Tax Invoice.

You should have no problem finding out from your suppliers whether they are registered
to charge VAT/NHIL. Their VAT Certificate of Registration must be conspicuously
displayed at their principal place of business.

(5)

What must a VAT/NHIL Invoice show?

When you issue a VAT/NHIL invoice, it must be serially numbered and issued in that
serial, chronological or numerical order.
The invoice must also include the following information Reg. 19 (2).
a)

Your name, address and VAT registration number.

b)

The date on which the invoice was issued.

c)

The date of the supply if this is different from (b) above.

d)

The name, address and VAT registration number, if any, of the person to whom
you make the supply.

e)

The description, quantity and price of the goods or services being supplied.

f)

The taxable value of the goods or services if different from the price charged.

g)

The VAT and NHIL charged on the goods/services supplied.

You will find examples of how you could make out VAT/NHIL invoices at the end of this
booklet (see Appendix A)
(6)

What about Cash Sales of Goods from Retail Premises?

If you make only cash sales from retail premises the Commissioner may authorize you to
operate the Special Retail Scheme (i.e. issue a special retail sales receipt) in place of
the VAT/NHIL invoice on application Reg. 33.
However, you must comply with the following conditions as stated in the law Reg. 30.

a)

Record the value and brief details of each supply as it occurs and before your
customers leave the business premises.

b)

Keep a cash register, book or other suitable record at each point of sale in which
you must enter details of all cash received and cash payments made at the time
that they occur.

c)

At the end of each day, record totals of money received from sales, money paid
out for purchases and expenses and the balance.

d)

You must then enter as a separate total the output tax chargeable on supplies
made (i.e. the VAT/NHIL content of total money received). The total input tax
shown on tax invoices in respect of purchases should also be entered in the
record.

e)

In the final step deduct the total input tax from the output tax at the end of each
month and pay the difference to the VAT Service.

NOTE: A VAT-registered person authorised to operate the special retail scheme is

obliged to issue the Commissioners VAT/NHIL invoice at the request of a
customer who is also registered for VAT.
(7)

What does the Time of Supply Mean?

This is the time when a supply for goods or services is treated as having taken place. It
is called the tax point and establishes the time for accounting for VAT/NHIL in the
business records.

(8)

How do I Work Out the Tax Point?

VAT/NHIL becomes due and is payable when;

you supply the goods or services to the purchaser; or

you issue an invoice in respect of the supply; or

you receive payment for all or part of the supply;

whichever occurs earliest.

There are however some exceptions to this rule. For example, if you make supplies on
a continuous basis or by way of a meter (e.g. electricity), the tax becomes chargeable
with effect from the date of the first determination of the supply or the first meter reading
and subsequently the tax will become due and payable at the time of each determination
or meter reading.

To issue a tax invoice means that you must send or give it to your customer. It is
not enough simply to have prepared it.

(9)

What about Imports and Goods removed from Warehouse?

5

VAT/NHIL is payable at the time you enter the goods at importation or remove them from
a customs warehouse. To claim the input VAT/NHIL related to imports or removals from
a customs warehouse, you must have official evidence in the form of:

(10)

i)

A copy of the customs import entry documents and evidence of payment of the
relevant import VAT/NHIL, or

ii)

A warehouse document and evidence that VAT/NHIL has been paid on the items
removed. The customs entry documents may still be relevant in this case.
You must show the VAT/NHIL claimed as a separate total in your purchase
record.

What Records must I keep?

You must keep the following basic records:
a)

A record of all taxable goods and services that you receive as part of your
business purchases.

b)

A record of all taxable goods and services that you supply as part of your
business sales. This also includes zero-rated and relief supplies.

c)

A record of any exempt supplies that you make.

You should be able to use or adapt your normal business records for VAT/NHIL
purposes. They must however show the proper tax due and how the figures are
determined. The records must be complete and kept up to date. The figures that you
have used to complete your VAT/NHIL return must be easy to identify from these
records. Periodically, a VAT Service Control/Verification (C/V) officer will visit your
premises to inspect these records.
The records that must be kept and produced to a VAT Service officer on a C/V visit
include:
a)

Copies of all invoices issued, in serial number order.

b)

Copies of all credit and debit notes issued, in chronological order.

c)

All purchases invoices, copies of customs entries, receipts for payment of

customs duty and VAT/NHIL as well as credit and debit notes received. These
must be filed chronologically, either by date of receipt or under each suppliers
name.

d)

Details of the amount of VAT/NHIL charged on each supply made or received.

e)

Totals of the output tax and the input tax in each period and the net total of the
tax payable or the tax credit/refund of tax due at the end of each month.

f)

Details of goods manufactured and delivered from the factory of the taxable
person if (applicable).

g)

(11)

Details of each supply of goods and services from the business premises, unless
such details are available at the time of supply on invoices issued at, or before,
that time.

If you give any goods away or take any goods from your stock for private use,
including gifts,
You must record:
i.

The type/nature of goods, (i.e. what the goods are.)

ii.

The date you took the goods from stock;

iii.

The VAT/NHILexclusive cost of the goods, (i.e. the taxable value of the goods.)

iv.

The rate and amount of VAT/NHIL chargeable.

Remember, if you issue a Credit Note to a customer for sales returns, the VAT/NHIL
component of the Credit Note will reduce the amount of VAT/NHIL you have to account
for as output tax. In the same way if you receive a Credit Note from a supplier, it will
reduce the amount of input tax you can deduct.
At the end of each tax period you must add up the input tax and output tax shown in the
records and transfer it to your VAT/NHIL account.
(12)

(13)

Remember that if you are Deducting Input Tax:

a)

You must have a valid VAT/NHIL invoice or the relevant customs documents
showing that you paid the VAT/NHIL

b)

The purchase must be made wholly and exclusively for your business and must
be applied for your taxable supplies.

For how long must I keep my Records?

You must keep all your business records for a minimum period of six years S. 29 (2).
These records may include the following, in addition to the others earlier mentioned.
(Ref. Reg. 37):
a)

Orders and delivery notes

b)

Relevant business correspondence

c)

Purchase and sales books

7

(14)

d)

Cash book, petty cash vouchers and other account books, including ledgers

e)

Records of daily takings such as till rolls

f)

Annual accounts, including Trading and Profits and Loss Accounts and Balance
Sheet

g)

Bank statements, paying-in-slips and cheque books

h)

Your VAT/NHIL account

i)

Any other documents which may be relevant to the computation of your tax
liability.

What is a VAT/NHIL Account?

A VAT/NHIL account is simply a summary of the totals of your output and input tax for
each accounting period. The account will show the tax payable to the VAT Service, the
credit to be carried forward or the refund due to you from the Service. You should add
up the VAT/NHIL in your records and put the totals in your VAT/NHIL account with
separate headings for:
INPUT TAX ON:
Purchases and expenses, Imports, errors in earlier returns (net of Purchases Returns).
OUTPUT TAX ON:
Sales and errors in earlier returns (net of Sales Returns)

Do not forget to adjust your VAT Account for any Credit or Debit Notes issued to your
customers or received from your suppliers.
At the end of each accounting period, subtract your input tax from your output tax and
record the difference.
You may use the figures from your VAT/NHIL Account to fill in your VAT/NHIL Return.
You will find an example of how you could keep a VAT/NHIL Account at the back of this
booklet (see Appendix B).
(15)

Period for Filing Returns

Your must send in your VAT/NHIL Return and any payment due, not later than the last
working day of the month that follows the month covered by the return (S.28).
Remember that where no sales and/or purchases have been made or recorded in an
accounting period, you must still submit a return as NIL within the usual time period for
submission of returns.

(16)

Using Computerized Records

If you keep all or part of your records and accounts on a computer, you must make sure
that you can account for VAT/NHIL properly and that VAT officers can carry out their
normal periodic checks. It is important that you apply to your Local VAT Office for the
8

Commissioners authorization to keep your VAT/NHIL records in a computerized form

Reg. 37(2).

(17)

Visits by VAT Service Officers

From time to time VAT Service officers will arrange to come and visit you at your place
of business. They will give you any help you may need and will also examine your
business records, premises and merchandise, so please remember to have all of them
easily available.

(18)

What IF.
Q.

I cancel or spoil a serially numbered tax invoice?

A.

Do not destroy it. Just keep all copies of it in sequence for the VAT officers to
inspect on their next visit.

Q.

My records are lost, stolen or destroyed?

A.

You should inform your Local VAT office immediately.

Q.

I record details of my sales invoice when my customers pay me. Can I sue
this record to work out my output tax?

A.

No, you can only use such a cash basis to account for VAT/NHIL if permitted by
the Commissioner. These records may be relevant but you must record details
of your sales invoices in the order that you issue them. You must account for the
VAT/NHIL at the date of the tax point even though your customer may not have
paid you.

Q.

I keep copies of my VAT/NHIL Returns. Can I use them as my VAT/NHIL

account?

A.

No, the VAT/NHIL account has to be a separate record.

Q.

I have not paid for some of my purchases when my VAT/NHIL return is due.
Can I still deduct the VAT/NHIL?

A.

Yes, provided you have valid tax invoices which show tax point dates before the
end of the period covered by the return.

Q.

I receive a PRO-FORMA INVOICE from my supplier showing full details of

the cost, the terms and VAT/NHIL. Can I deduct the VAT/NHIL on my next
return?
9

A.

No, a pro-forma invoice is not a valid tax invoice. You can only deduct the tax
when you get an actual VAT/NHIL invoice.

Q.

I lose the original VAT/NHIL invoice but have the details on a statement
from my supplier. Can I deduct the VAT/NHIL?

A.

No, to deduct the VAT/NHIL, you must have a valid tax invoice. You should ask
your supplier to provide you with a copy of the VAT/NHIL invoice, which should
be clearly marked duplicate

Q.

I do not keep the required records; what may happen?

A.

If the Commissioner considers that you are not complying with the official
requirements, or he considers that additional records should be kept, he will
issue you with a notice requiring you to keep such records or take such action as
he may specify. If you fail to comply with such notice you may be guilty of an
offence under the VAT Act.
Small booklets like this can only deal with VAT/NHIL issues in a general way.
They cannot tell you all that you need to know about VAT/NHIL. Remember, if
you cannot find the answer to your problems in the VAT/NHIL Public Notices,
your local VAT Office is always ready to help. When in doubt contact your local
VAT Office.

10

EXAMPLE OF A TAX INVOICE

VAT & NHIL INVOICE

From: Suiting & Coats Gh. Ltd

P. O. Box GP 99999
Accra Main

Suppliers TIN:

Customers TIN: 114s001482

Date of Invoice:

To:

2141000799
14/01/2005

Nighties Silk Ltd

P. O. Box X40000
Accra

QTY

DESCRIPTION

UNIT PRICE
(Excluding VAT & NHIL)

Amount

10 pairs

Leather gloves

20,000

200,000.00

5 units

Mens Suit

850,000

8,500,000.00

5 pairs

Cuff links (gold-plated)

150,000

750,000.00

(i) Total Amount (excluding VAT & NHIL)

(ii) VAT (12%)

1,181,250.00

(iii) NHIL (%)

256,250.00

(iv) TOTAL VAT + NHIL (ii + iii)

TOTAL AMOUNT PAYABLE (including VAT & NHIL) (i + iv)

Terms of Payment

9,450,000.00

1,417,500.00
10,867,500.00

Cash
Suppliers Signature

11

EXAMPLE OF A TAX INVOICE

HOTELS, GUEST HOUSES,
RESTAURANTS & SNACK BARS
VAT & NHIL RECEIPT/INVOICE
Received from

XYZ Consult

The sum of

Fourteen million, four hundred and ninety thousand cedis

In respect of

Accommodation & meals for conference

ITEM

AMOUNT

Accommodation:

Conference Room

2,000,000

ii

Food:

50 guests @ 200,000.00

10,000,000

iii

Drinks:

iv

Others (specify):

Secretarial Services

600,000
-

SUB-TOTAL

12,600,000.00

vi

VAT (12%)

1,575,000

vii

NHIL (2%)

315,000

viii

VAT+NHIL (vi + vii)

1,890,000.00

GRAND TOTAL (v + viii)

Supplier:

High Class Hotel Ltd

TIN:

215E001424

14,490,000

Designation: Cashier
Date :

14/01/2005

Signature

12

AN EXAMPLE OF VAT/NHIL ACCOUNT PERIOD FROM

1ST JANUARY TO 31ST JANUARY 2005
VAT/NHIL Deductible Input Tax

VAT/NHIL Payable Output Tax

Deductible VAT/NHIL charged on

purchases and expenses.

50,000,000

VAT on Sales

72,000,000

Total VAT/NHIL payable to VAT

Service.

22,000,000

TOTAL

72,000,000

TOTAL

72,000,000

WHERE TO GET HELP

You can get more information about VAT/NHIL from the following VAT Offices:
1.

VAT Service Head Office, Near IRS Head Office, Ministries Area
P. O. Box 17177, Accra
Tel: 661525-6, 674187
Fax: 674186, 244917

2.

Kaneshie Industrial Area Local VAT office, Katenit Building, Dadeban Road, North
Industrial Area, Accra
Private Mail Bag 197, Accra North
Tel: 224368, 244910-9
Fax: 244912

3.

Adabraka Local VAT Office, VAT House, Ring Road Central, Circle
Next to Busy Internet
Tel: 028 9539216 - 19
Fax: 247958

4.

Ringway Estate Local VAT Office, Opposite Police Headquarters, Accra

Private Mail Bag 63, Cantonments Accra
Tel: 223976, 224276, 221714, 224882
Fax: 229288

5.

Tema Local VAT Office, SSNIT Flats, (Comm. 5), Behind TTL Club Hse.
P. O. Box CE 12391, Tema
Tel: 022-205854, 201290
Fax: 022-201290
13

6.

Kumasi Local VAT Office, SIC Building, Near Prempeh Assembly Hall
VAT Service Private Mail Bag, Kumasi
Tel: 051-26738, 29457, 27772
Fax: 051-27772

7.

Takoradi Local VAT Office, Harbour Area, Clifford Road Opp. European Hospital
P. O. Box 615, Takoradi
Tel: 031-21107
Fax: 031-21337

8.

Koforidua Local VAT Office, SSNIT Building (4th Floor)

P. O. Box 2034, Koforidua
Tel: 081-22516
Fax: 081-22313

9.

Okaishie VAT Sub Office

Ollivant Arcade
Tel: 021-6744482/83
Fax:021-674480

10.

Cape Coast VAT Sub Office, 1st Floor Municipal District Edu. Blk.
Near Jubilee Sch. Buelah Lane
P. O. Box CT 958, Cape Coast
Tel: 042-32072, 30469, 35926
Fax: 042-30469

11.

Sunyani VAT Sub Office, Cocoa House (4th Floor)

P. O. Box 1745, Sunyani
Tel: 061-23580/23066
Fax: 061-23067

12.

Tamale VAT Sub Office, Near Police Headquarters, Towards

Regional Administration Off.
P. O. Box 530, Tamale
Tel: 071-23445/22204/25342
Fax: 071-23445

13.

Ho VAT Sub Office, Light House, Big Market

P. O. Box 134, Ho
Tel: 091-26789/27212
Fax: 091-27212

14.

Wa VAT Satellite Station, 1st Floor, Controller & Accountant Generals Block Wa
P. O. Box 526, Wa
Tel: 0756-22421/20726
Fax: 0756-22421

15.

Bolga VAT Satellite Station, SSNIT Building (Sacred Heart Catholic Church)
P. O. Box 509, Bolga
Tel: 072-22171/23477
Fax: 072-23477
14

16.

Aflao VAT Satellite Station, 1st Floor, Excel Filing Station, Viepe
P. O. Box 289, Aflao
Tel: 0962-30663/30693
Fax:0962-30693

17.

SUAME VSO, Kwasi Oppong Rd.

Adjacent to Juaben Rural Bank opp. Joy Flux Spare Parts.
1st Floor, Bamson Sikkens Building
P. O. Box SE 1485, Suame
Tel: 051 83967 9

18.

SPINTEX ROAD VSO, Adjacent to Barclays and Zenith Bank, Spintex Road.
P. O. BOX GP 17177
Tel: P. O. BOX GP 17177

19.

TARKWA VSS, 2nd Floor, SIC Building Main Commercial Street, Adjacent to GCB
P .O. Box 307Tarkwa
Tel: 0362- 20716024 - 4521180

20.

NKAWKAW POP, 1st Floor, Mibo House, Opp. Novotec, Accra Kumasi Main Road
P. O. Box 2034 Koforidua
Tel: 0842-22392

21.

ODA POP, IRS Building Ground Floor, Oda

P.O. Box 2034 Koforidua
Tel: 081-94003

22.

MADINA VSO, Madina Shell Filling Station Hollywood Plaza, Madina

P.O. Box 17177 Accra
Tel:021- 519962-4

The Full list of VAT Public Notices are as follows:

Public Notice 1

(PN 1)

Why VAT & NHIL for Ghana?

Public Notice 2

(PN 2)

Should I be Registered for VAT/NHIL?

Public Notice 3

(PN 3)

VAT & NHIL A General Guide

Public Notice 4

(PN 4)

VAT & NHIL Keeping Records & Accounts

Public Notice 6

(PN 6)

Filling in a VAT/NHIL Return

Public Notice 7

(PN 7)

VAT/NHIL - Imports & Exports

Public Notice 8

(PN 8)

Partial Exemption

Public Notice 9

(PN 9)

Special Retail Schemes

Public Notice 10

(PN 10)

VAT/NHIL Liability Guide

15