Why an appeal against the High Court’s ruling in the FBC Partners v GRA case must succeed

At a glance

• The Ruling: The High Court ruled that a 2025 real estate deal between FBC Partners and Bay Developers should be taxed at the old 5% VAT rate, not the new 20% rate that took effect in January 2026.
• Jurisdictional flaw: We argue the court had no proper jurisdiction to hear the case at all. There was no GRA decision, assessment, or audit for the court to review.
• Substantive error: We also argue the court ignored the VAT law’s own “time of supply” rules, which would tax each instalment payment separately at the rate in force when it falls due.
• Bottom line: On the facts disclosed in the Ruling, only the US$300,000 deposit paid in 2025 should attract 5% VAT and the balance invoiced in 2026 should attract 20%.

Introduction

The High Court recently delivered a Ruling in the FBC Partners Ghana Limited v Ghana Revenue Authority matter. The main issue before the court was whether 5% VAT under the repealed law should apply or the current 20% rate should apply. The court determined that 5% is the correct rate to use since the agreement for the sale and purchase was reached in 2025. The court determined that using the current rate will be retrospectively applying a new rate to a past transaction. This will be contrary to Ghanaian law.

In this article, we argue that the High Court erroneously assumed jurisdiction over this matter. We also argue that the decision of the High Court bypassed fundamental VAT “time of supply” rules in favour of contract completion principles and other rules not contained in the VAT law. We conclude that there is a case for this Ruling to be overturned if the statutory provisions of the VAT law are applied.

Brief facts of the case

This was an application by FBC Partners to the court. FBC Partners wanted the court to declare that the VAT rate applicable to a transaction that FBC Partners entered with a real estate company, Bay Developers and Realty Limited, in 2025 is 5%, instead of the 20% (15% VAT and 5% levies) applicable in 2026. Under the Value Added Tax Act, 2013 (Act 870), which was repealed at the end of 2025, the VAT rate on some real estate transactions was 5%. From the beginning of 2026, a new VAT law, Act 1151 came into force and removed this 5%. So, now, real estate transactions will suffer 20% VAT. This is what the FBC Partners was challenging.

FBC Partners argued that the new 20% cannot apply to it. The basis of this argument is that since it entered the contract in 2025 at a time when the VAT rate was 5%, it is that rate that must continue to apply to the contract, regardless of whether there is a new law or new rate. According to FBC Partners, on 26 June 2025, it entered an agreement with Bay Developers to purchase a real estate property valued at US$3,000,000. It made an initial deposit of US$300,000. In January 2026, the parties reduced their agreement into a formal sales and purchase agreement. In FBC Partners’ view, since it actually concluded the agreement in 2025, it is the VAT rate of 5% that must apply to the entire transaction.

The court agreed with FBC Partners and held that the sale took place in 2025. Consequently, the applicable VAT rate is 5% and not the new 20%. The court declared the invoice issued by Bay Developers which used 20% VAT rate as void and ordered Bay Developers to re-issue its invoice using 5%.

The GRA’s response

The GRA argued that FBC Partners did not properly invoke the court’s jurisdiction and hence the entire application should be dismissed. The GRA said the application was founded on the wrong statutory provision and so the court did not have the appropriate power to go into the matter. The GRA complained that FBC Partners and Bay Developers didn’t even ask it of its opinion or ruling on the matter before rushing to court. The GRA didn’t understand why FBC Partners didn’t include Bay Developers in the court action.

On the substantive matter, the GRA relied on the “Time of supply” rules in Act 1151 to say that each payment is supposed to be treated as a “separate supply”. As a result of this separate supply rule, each time a payment is being made or an invoice is being issued, that activity should be considered as a supply. 

Critique of the court’s jurisdictional arguments

One of the two issues the court raised was whether it had jurisdiction. The summary of the court’s analysis is that as a High Court, the Constitution, 1992, confers jurisdiction on it in all matters. So it doesn’t understand the GRA’s preliminary legal objection. Although the High Court has constitutional jurisdiction, the mode and manner in which the jurisdiction is invoked is important. If its jurisdiction is improperly invoked by a wrong originating process, that action must fail. Even in tax matters where the taxpayer sought judicial review of the GRA’s actions without exhausting the internal procedure, the Supreme Court held that the taxpayer’s action must fail (see Ex parte Afi African Village Limited). Obviously the High Court still had the constitutional jurisdiction but it was improperly and prematurely invoked hence the dismissal of those cases.

No statutory right to apply to court

The Court’s narration of events is that FBC Partners came to court using an originating motion that was originally grounded on section 18 of Act 870. FBC Partners later amended this originating motion pursuant to section 3 of Act 870 and the court’s inherent jurisdiction. An originating motion must trace its power to the Constitution, a statute or a rule of procedure, usually in the form that a person “may apply to the court” for something. The Companies Act, 2019 (Act 992) illustrates what this looks like. Section 79(1) says a company that passes a resolution requiring confirmation “may apply to the Court for an order confirming the resolution.”

Neither section 3 nor section 18 of Act 870 contains anything like this. Indeed, the entire Act 870 does not grant anyone a right to apply to court for anything. This is by design. By the time a court is invited into a tax matter, there should already be a decision by the GRA under challenge. Here, there is none. The GRA has not audited FBC Partners or Bay Developers on this issue. FBC Partners itself admits it is not challenging a tax imposed by the GRA. It came to court because Bay Developers issued a tax invoice on 20 February 2026 using 20% VAT. That is a private dispute between contracting parties, not a tax dispute with the GRA, and there is nothing for the GRA to defend.

Failure to exhaust internal remedies

Even setting aside the fact that Act 870 does not support the application, the law requires exhaustion of internal remedies before a court is the right forum. The Revenue Administration Act, 2016 (Act 915) allows a taxpayer to seek the GRA’s interpretation through a private ruling. Even if the taxpayer disagrees with that ruling, section 103(6) of Act 915 provides that a private ruling “is not subject to challenge“. Only a subsequent tax decision or assessment adopting that ruling can be challenged. The expected path is: seek a ruling (or don’t), wait for an audit, and if the GRA raises an assessment based on its interpretation, use Act 915’s dispute resolution procedure. The route is objection, appeal to the Independent Tax Appeals Board and an appeal to the High Court.

None of that happened here. FBC Partners and Bay Developers did not even ask the GRA for its view before taking the GRA to court. Allowing this Ruling to stand sets a troubling precedent. It would mean any taxpayer can bypass the GRA entirely and ask the High Court to interpret a tax provision in the abstract, without an assessment or an audit, completely undermining exactly the process Act 915 is designed to require. Imagine how often the GRA would be in court for interpretations if every taxpayer decides to ask for the court’s interpretation before the GRA raises an assessment.

Misapplication of the retrospectivity rules

FBC Partners’ argument is that if VAT of 20% is applied, it will mean Act 1151 is being applied retrospectively. This is a serious claim that requires a careful analysis. In our view, the court should have first answered the question of whether there was a supply when the agreement was reached in 2025. The question of retrospectivity only arises if the law attempts to tax a supply that was fully completed in 2025.

With due respect to the court, it misdirected itself on the nature of the matter before it. After wrongly satisfying itself that it had jurisdiction, the only other question the court answered was whether Act 1151 was being applied retrospectively if the 20% rate is used. For us, this question doesn’t arise. Had the court considered the GRA’s argument on time of supply, it would have realised that the VAT law itself deals with such a situation. So, unfortunately, the analysis done by the court on how Ghana prohibits retrospectivity of laws that affect accrued rights is irrelevant. This analysis, while stating the correct positions of the law in Ghana, is premature, does not deal with the real controversy and completely overlooks what the VAT law provides. Even if the court formed the view that the VAT law’s answer in relation to time of supply rules violate the constitutional provision on retrospectivity, it has no power to strike down those provisions.

Understanding the transaction

Generally, in real estate matters, when parties enter a contract for the sale of land or building, it gives the vendor and the purchaser certain rights. A normal contract doesn’t confer interest in the property on the purchaser, but gives the purchaser a right to sue for breach of contract if anything goes wrongly. From the events, the parties expected to complete this contract for sale in August 2025. The legal rights resting on this contract of sale have no bearing on when VAT is due.

A real estate transaction is considered as a supply of goods for VAT purposes. The VAT Act defines goods to include both moveable and immovable property. So the sale of land or building is a supply of goods for VAT analysis. In normal commerce, a sale triggers VAT on the full amount. Whether it is a cash sale or credit sale, once the invoice is issued or goods are made available to the customer, VAT is due. These rules are discussed below.

Time of supply rules

Time of supply is an important concept in VAT jurisprudence. Every VAT law must indicate when VAT output is due and when a taxpayer can start taking deductions for input VAT. The time of supply rules determine when a person will be deemed to have made a supply. In this case, we need to check what the VAT law says about the agreement between FBC Partners and Bay Developers. Section 39 of Act 870 provides that:

39. (1) Except as otherwise provided in this Act or Regulations, a supply of goods or services occurs,
(a) where the goods or services are applied to own use, on the date on which the goods or services are first applied to own use;
(b) where the goods or services are supplied by way of gift, on the date on which ownership in the goods passes or the performance of the services is completed;
(c) in any other case, the earliest of the dates on which
(i) the goods are removed from the premises of the taxable person, or from other premises where the goods are under the taxable person’s control;
(ii) the goods are made available to the person to whom they are supplied;
(iii) the performance of services is completed;
(iv) receipt of payment is made; or
(v) a tax invoice or sales receipt is issued.

(2) Where under subparagraphs (iv) and (v) of paragraph (c) of subsection (1), payment is received or a tax invoice or sales receipt is issued for part of the supply, this section applies only to the part of the supply represented by the payment or the tax invoice.
(3) …
(4) …

(5) Where
(a) goods are supplied under a rental agreement, or
(b) goods or services are supplied under an agreement or law which provides for periodic payments, the goods or services shall be considered as successively supplied for successive parts of the period of the agreement or as determined by that law, and each successive supply occurs on the date on which payment is due or received, or that the invoice is issued, whichever date is earlier.

(6) For the purposes of this section, where two or more payments are made or are to be made for a supply of goods or services, other than a supply to which subsection (4) or (5) applies, each payment shall be regarded as made for a separate supply to the extent of the amount of the payment on the earlier of the dates that the payment is due or received.

(7) In this section, the term “rental agreement” means any agreement for the letting of goods other than a hire purchase agreement or finance lease.

(8) …

Section 39(1) stated a general position on when a supply can be deemed to have been made. For our purposes, we must start from section 39(1)(c). This section indicated five situations to consider and whenever any of them happens first, a supply is deemed to be made. These situations included making the goods available to the purchaser, issuing a tax invoice or receiving a payment. So, even if a part payment is made, this general rule expected the VAT on the full value of the supply unless this general rule was modified. There were several modifications to this general rule.

To see why the date the contract was signed doesn’t matter, consider this example. Suppose a customer buys a photocopier from a shop in 2025, on credit, with no payment made that year. If the shop hands the photocopier over in 2025, i.e., the goods are “made available” to the customer under section 39(1)(c)(ii), then the full VAT on the photocopier is due in 2025, regardless of when payment is actually received or the invoice is raised. All later payments are simply debt repayment. They don’t trigger fresh VAT.

Section 39(2) added that if the invoice issued or payment covers part of the supply, or in other words there was part payment, the time of supply rules covered only that part. This meant that it was only the part reflected in the invoice or payment on which VAT was due.

Section 39(5)(b) provided that when goods were supplied under an agreement that provided for periodic payments, the goods should be considered as successively supplied for each successive part. That is, each successive supply occurred on the date payment was received or invoice was issued. This situation applied for instalment payments. What would ordinarily qualify as a single supply was broken into multiple supplies with each occurring whenever the invoice was issued or payment was received, whichever came first.

Section 39(6) was meant to be a residual provision. For goods with multiple payments, it did not apply. In any case, its effect was the same as what was provided in section 39(5).

From the illustration above, if the shop rather keeps the photocopier and agrees to invoice the customer in instalments, the transaction is broken into separate supplies. Each instalment invoice is its own supply, taxed at whatever rate applies on the date the invoice is issued, even if the underlying contract was signed years earlier.

Applying the rule to FBC Partners’ transaction

Out of the US$3,000,000 purchase price, only US$300,000 was paid in 2025. Because the full amount was not paid that year, section 39(1) does not apply on its own. Sections 39(2) and 39(5)/(6) take over, since the price was payable in more than one instalment. Each payment (or invoice) is therefore its own supply, taxed at the rate in force on the earlier of the date payment is due/received or the date the invoice is issued. The one fact that would change this is whether Bay Developers actually handed the property over to FBC Partners in 2025. If it did, section 39(1)(c)(i)–(ii) fixes the time of supply at that handover date, and the full price is taxed at 5%.

The Ruling does not disclose which scenario applies, because it never asks whether or when the property was made available to FBC Partners. That omission is the central defect in the court’s reasoning. Instead of applying section 39, the court appears to have treated the 2025 Letter Agreement as a completed credit sale, with all later payments treated as mere debt settlement. This concept is irrelevant for determination of when a supply is made. Based on the payment facts recited in the Ruling, the transaction most plausibly falls into Scenario B, meaning the correct outcome would have split the invoice: 5% on US$300,000, and 20% on the US$2,700,000 balance and not a blanket 5% on the full purchase price as the court ordered.

GRA’s alternative course of action

While the GRA has every right to challenge this Ruling, it can decide to implement effect of the Ruling. The effect of the first three declarations made by the court in its Ruling is that the relevant date for VAT purposes is 26 June 2025 and hence the VAT rate applicable is 5%. The only reason this date is relevant is because the court is treating the transaction as sale on credit. That is, the sale happened on that day although payment was not made. All payments must therefore make reference to that date as the transaction date and the VAT must be calculated as if there was cash sales on that date. 

It means that the VAT on the full purchase price was due on 26 June 2025 and at any rate, this VAT should have been paid by 31 July 2025. Further, COVID levy of 1% must apply to the purchase price. The GRA may choose to immediately raise an assessment on Bay Developers demanding the full 5% VAT amount. For good measure, the GRA may impose late payment interest on this amount.

The GRA should not complain too much about the order to use 5% VAT rate. This is because under the 5% regime, Bay Developers was not allowed to deduct any input VAT. Any VAT it incurs is built into the price. That is why the VAT rate it charged was a flat 5%. However, under the 20% regime, it is allowed to claim any VAT it incurs and should ordinarily not be passing that to FBC Partners. Ordinarily, before using the 20%, Bay Developers should have removed all recoverable input VAT from the purchase price leading to a reduction in this price. Assuming the construction of the property was completed, Bay Developers loses the right to claim any input VAT deduction. If FBC Partners qualifies for input VAT deduction on the purchase of this property, it will only deduct the 5%. If the GRA insists on the 20% and is successful in any challenge to this Ruling, FBC Partners will deduct 20% VAT

Conclusion

On both grounds examined above, this Ruling rests on shaky foundations. Procedurally, FBC Partners invoked provisions of Act 870 that confer no right to apply to court, in the absence of any tax decision, assessment, or even a private ruling request to the GRA. The High Court’s constitutional jurisdiction does not cure a defectively invoked originating process, and the Ruling’s brief treatment of this objection does not engage with the case law on premature invocation of judicial review in tax matters.

Substantively, the Ruling never deals with section 39 of the VAT Act. By treating the 2025 Letter Agreement as if it were a completed credit sale, the court imported a “date of contract” test that the time-of-supply rules do not recognise. Under sections 39(2), (5) and (6), a transaction paid in instalments is broken into separate supplies, each taxed at the rate in force when that payment or invoice falls due, unless the property was actually made available to FBC Partners in 2025, a fact the Ruling never establishes. On the record as it stands, only the US$300,000 deposit should attract 5% and the balance invoiced in February 2026 should attract 20%.

Given these gaps, the Ruling is vulnerable to being overturned on appeal. The GRA is not without options. It can treat the US$3,000,000 as a 2025 supply and immediately assess Bay Developers for the full 5% VAT (plus late-payment interest), since that is the logical consequence of the court’s own reasoning. That is, since the court has operated outside Act 870 by adding the date of agreement as a new time of supply, we must follow the implications of recognising this date.