Ghanaian Startups Brace for Higher Costs as AWS Introduces 21% Tax

Amazon Web Services (AWS) will impose a 21% tax on cloud services in Ghana starting March 1, 2025, significantly raising operational costs for startups relying on the platform for data storage and digital infrastructure.

Breakdown of the New AWS Tax

According to a notice from AWS, 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

This tax increase adds to the financial burden on Ghanaian startups, many of which are already struggling with a challenging economic and tax environment.

Impact on Ghanaian Startups

For startups that depend on AWS for scalability and innovation, the new tax could reduce affordability and increase operational costs, making it harder to compete with businesses in regions with more favorable cloud service taxation policies.

In contrast, AWS has taken steps to ease payment challenges in other markets. In January 2023, the company began accepting Naira payments to reduce foreign exchange costs for Nigerian customers, alongside seven other local currencies. However, Ghanaian startups will now face additional financial strain without similar payment adjustments.

A Struggling Tax Landscape for Businesses

Ghana’s broader tax system has long been a point of contention for startups. In 2023, Ghana’s parliament introduced new taxes on individuals and businesses, following an increase in VAT from 12.5% to 15%. These financial policies have raised compliance costs and slowed growth in the tech and startup ecosystem.

The introduction of AWS’s new tax could further push Ghanaian startups toward alternative cloud providers or on-premises infrastructure, potentially hindering innovation and digital transformation.

Is the Market Resilient?

Despite these hurdles, Ghana’s public cloud market remains on an upward trajectory, with revenue projected to reach $306.10 million in 2025, according to Statista. However, whether Ghanaian startups can maintain their momentum and affordability in the face of rising cloud service costs remains to be seen.

For Ghana’s growing startup ecosystem, which depends on cost-effective cloud services, the AWS tax adds another challenge in an already complex business landscape.