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Amazon Web Services (AWS) has announced that starting March 1, 2025, a 21% tax will be applied to cloud services for customers in Ghana.
The tax consists of 15% Value Added Tax (VAT) and an additional 6% in levies, which include the National Health Insurance Levy, the Ghana Education Trust Fund Levy, and the COVID-19 Health Recovery Levy.
This announcement has sparked concerns within Ghana’s tech ecosystem, with industry leaders warning that the tax could pose significant challenges for startups and the country’s broader digital transformation efforts.
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Ghana has been pushing a digitalisation agenda in recent years, with many businesses relying on cloud services to scale efficiently. However, experts argue that this new tax could increase operational costs, discourage innovation, and slow down digital adoption.
According to Ethel Dela Cofie, Founder and CEO of EDEL Technologies, the tax will particularly hurt startups that rely on affordable cloud services for their operations.
She outlined key concerns, including:
- Higher Costs for Startups: Cloud services allow businesses to scale without major upfront costs. A 21% tax will increase expenses, making it harder for startups with limited budgets to sustain operations.
- Reduced Competitiveness: The added financial burden may deter startups from using essential cloud technologies, putting them at a disadvantage against competitors in other countries with less punitive tax structures.
- Slower Digital Growth: The additional tax may discourage businesses from migrating to digital platforms, potentially delaying Ghana’s digital transformation and limiting economic growth in the tech sector.
To mitigate the impact of the tax, industry players have proposed several measures:
- Government Subsidies or Tax Reliefs—Providing subsidies or tax exemptions for startups could help offset rising costs and encourage cloud adoption.
- Support for Local Cloud Providers—Encouraging the development of local cloud services could provide affordable alternatives for startups.
- Dialogue with Government—Tech industry stakeholders can engage with policymakers to negotiate a tiered taxation system, which considers the revenue levels of startups.
Despite these concerns, Ghana’s public cloud market is projected to grow by 19.78% between 2025 and 2029, reaching an estimated $630 million by 2029. However, sustaining this growth will require strategic interventions to ensure that startups are not priced out of cloud-based solutions.
While the government aims to increase tax revenues from the digital economy, balancing taxation with innovation-friendly policies will be crucial in maintaining Ghana’s position as a growing digital hub in Africa.
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