Starting March 1, 2025, Amazon Web Services (AWS) will impose a 21% tax on its cloud services for Ghanaian customers. This additional cost is expected to increase operational expenses for Ghanaian startups that rely on AWS for data storage, computing power, and digital operations.
The 21% tax consists of:
- 15% Value Added Tax (VAT)
- 6% in additional levies, including the National Health Insurance Levy, Ghana Education Trust Fund Levy, and COVID-19 Health Recovery Levy
Impact on Startups and Business Operations
The tax could place Ghanaian startups at a disadvantage compared to competitors in regions with more favorable tax policies for cloud adoption. Startups that rely heavily on AWS for scalability, security, and digital infrastructure may face higher costs, potentially slowing down product development and market expansion.
Ghana’s broader tax environment has long been a challenge for businesses. In 2023, the government introduced new taxes on individuals and businesses while also increasing VAT from 12.5% to 15%. These additional levies have raised compliance costs, affecting business operations and growth.
Exploring Alternatives and Market Resilience
The tax could push Ghanaian startups to seek alternative cloud providers or on-premises infrastructure to manage costs. However, this shift may introduce operational complexities and limit innovation cycles.
Despite these hurdles, Ghana’s public cloud sector remains on a growth trajectory, with projected revenue of $306.10 million in 2025, according to Statista. The country’s thriving startup ecosystem, home to hundreds of tech-driven businesses, relies on affordable and scalable cloud services to drive innovation. However, the AWS tax hike threatens affordability, raising concerns about the long-term sustainability of digital startups in Ghana.