6 Major 2022 Tax Highlights in Ghana

6 Major 2022 Tax Highlights in Ghana
  • A brief review of how the Ghanaian Tax Administration fared in 2022.

For the Ghanaian tax administration to thrive better, it is important to review 6 major 2022 tax highlights in Ghana. While 2022 may have come and gone, there is a need for the Ghanaian tax administration to review its tax highs and lows during the year.

The year 2022 was an eventful one for the Ghanaian Tax Administration more so because the administration had high hopes of raking in more revenue from taxation as the saving grace from the hailing economy and pressure to borrow from the International Monetary Funds, IMF.

The West African country through its tax administration during the year also introduced new taxes, reviewed certain tax policies, engaged with relevant stakeholders in the tax administration, recorded thrilling results and most importantly, received a kickback from some of its policies.

6 Major 2022 Tax Highlights in Ghana

Africataxreview kept a close tab on the Ghanaian tax administration during the outgone year and we will be reliving the experience by highlighting 6 major highlights we reported as tax updates for 2022.

1. Workers’ Day Surprise

So 2022 world workers day celebrations in Ghana will forever be in the mind of Ghanaian Taxpayers as the collection of Ghana e-levy by the Ghana Revenue Authority, GRA kick-started May 1 2022.

The e-levy is the introduction of a 1.5% rate chargeable on all electronic transactions above GH¢100.00 from anywhere across Ghana.

According to the Ghanaian Authority, the rationale for introducing the e-levy is out of the need to expand the tax net as the Ghanaian economy has less dependent on the formal sector and less than 10% of the population pays direct taxes.

Similarly, the government of the day submits that an expanded tax net will capture the informal sector, reduce the nation’s ₦50bn debt and increase the nation’s tax-to-GDP ratio.

Ghana’s tax-to-GDP ratio according to President Nana Akufo Addo is put at 13% which is currently lower than the West African average of 18% not to talk of most European countries with a ratio of 35-45%.

The e-levy will also include bank transfers and remittances as well as mobile money transactions.

See the rundown that led to the introduction of the e-levy below:

  • After debates, the majority of the Ghanaian Parliament approved the Electronic Transactions (E-Levy) Bill on Tuesday 29th of March 2022. During its approval, the bill was reviewed under a certificate of urgency.
  • Although after the parliamentary decision, the minority group in the legislative arm dragged the Attorney-General to the Supreme Court over the approval of the Electronic Transactions Levy (E-Levy). This group argues that parliament at the point of passing the bill did not have enough numbers to do so.
  • Without delay, two days later, Thursday 30th March 2022, President Akufo-Addo signed the Ghana E-levy Bill into law.
  • Godfred Yeboah Dame, the Attorney-General of the country has since certified the parliamentary process with 266 MPs as legal.

The Tax had also raised a lot of public reactions.

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 2. Surge in Corporate Tax

In the third quarter of the year, a report made it to the public domain that the Ghana Revenue Agency had experienced a surge in revenue realized from corporate tax.

Analysing the surge, MTN alone was reported to have remitted ¢1.2 billion as corporate taxes to the GRA.

This remittance during the first half of the year (January to June 2021) came through direct and indirect taxes, reaching a 54% growth over the same period in 2021.

In totality, MTN’s financial records revealed that it earned a total of ¢1.33 billion as profit in June 2022 with an increased service revenue of 28.9% year-on-year driven by growth in voice, data and mobile money.

The successful run of the telecommunication giant is due to the increase in service revenue which reached a 28.9% year-on-year streak, especially with the recent diversification into fintech as led by Mobile Money (MoMo).

In the year under review, the company had reported capital investments of a whooping ¢1.1 billion to boost service quality and expand capacity and coverage on our network as well as the diligent execution of commercial strategies resulting in an increase in subscriber base, an increase in usage and engagement by our customers.

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3. Increased Projections from e-levy

Despite the immense dust raised by the implementation of the controversial e-levy, we had reported during the third quarter of the year that the Ghanaian Government had projected that the tax is expected to rake in a sum of GH¢750 million into the country’s coffers.

The projection came after the recent passage of the Value Added Tax Amendment Bill.

A key innovation in the E-VAT includes the upfront payment of the Value Added Tax by an importer who is not registered and the zero-rating of the supply of locally assembled vehicles.

The Ghana Revenue Authority also affirmed that all hands are on deck to ensure that all necessary arrangements are in place to take into consideration the new amendment as a warm-up to the final October 1st implementation of the electronic collection as stipulated by the amended Value Added Tax Act 870.

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4. Drop in Income Tax Payers

The Ghanaian Tax Administration during the year also reported a drop in its taxpayer base as only 20% of eligible taxpayers paid income tax in Ghana.

This worrying stat made it to the limelight through the Ghana Revenue Agency. 

The study further points low taxpayer knowledge among Ghanaians is the reason why only 20% of eligible taxpayers paid income tax.

The top echelons of the GRA explained that it was unable to deliver tax education to everyone in the country, recognizing that an opportunity in leveraging religious actors and their platforms to spread the message on taxation was not properly utilized.

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5. Approval of Ghana VAT Amendment Bill 2022

During the outgone year, we also brought it to your notice that the Ghanaian parliament had approved Ghana VAT Amendment Bill 2022.

We told you that the passage was after a heated debate on the floor of the House between the ruling New Patriotic Party (NPP) Members of Parliament MPs and the opposition National Democratic Congress MPs.

The bill was aimed at; amending the Value-Added Tax Acct, 2013 (Act 870), increasing the Value-Added Tax rate by 2.5%, modifying the Value Added Tax Threshold, reviewing the transitional provisions for the implementation of the electronic Value Added Tax (e-VAT) system, to amend the administrative penalties for non-compliance to the electronic Value Added Tax and to eliminate the Value Added Tax on betting, gambling, and other games of chance.

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6. A Move to Reduce E-Levy Rate

No doubt a major highlight of the Ghanaian Tax Administration in 2022 is the e-levy. The e-levy was brought to the spotlight again in 2022 as the government move to review downward the current 1.5% rate to 1%.

The downward review was revealed by the Minister for Finance and Economic Planning Ken Ofori Atta who detailed the modus of amending the Electronic Transaction Levy (E-levy) Act.

In addition to the downward review, the dissolution of the daily non-taxable threshold of GH100 was also proposed to the legislature.

On the flip side, other members of parliament already revealed their intention to utterly do away with the e-levy.

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Concluding Remarks

There you have it, the 6 Major 2022 Tax Highlights in Ghana which saw a major resharpening of the tax administration in the west African Country.

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