Ghana Moves to Reduce e-levy Rate

Ghana Moves to Reduce e-levy Rate
  • The move to downward review Ghana’s e-levy rate from 1.5% to 1% is also accompanied by the dissolution of the daily non-taxable threshold

‘Ghana moves to reduce e-levy rate’ is no doubt a headline that has gone down well with many Ghanaians in recent times. It is in this light that Ghana’s parliament are considering the proposal to review downward the current 1.5% rate to 1%.

In the course of introducing the 2023 Budget to the legislature, Finance Minister Ken Ofori Atta revealed that he plans to amend the Electronic Transaction Levy (E-levy) Act, also known as the e-levy.

He further buttressed the intention to reduce the e-levy rate from 1.5% to 1% to apply to any amount transferred electronically by the government.

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 don’t even want the e-levy to stand in its entirety as several protests were expressed by the minority.

Ghana Moves to Reduce e-levy Rate: Rationale for E-Levy

The e-levy during its May 1st introduction has been explained as a great source of tax revenue vital to the growth of the economy.

It was also conceived out of the rise and rise of the use of digital platforms for transactions as fall out of the COVID-19 pandemic.

Background on the Electronic Transfer Levy Act

Also known as E-levy, the Electronic Transfer Levy Act is a law enacted by the Ghanaian government which charges a tax of 1.5% on electronic transactions.

How it works is that when a trader receives an amount over GHS 100 either through mobile money or their local bank card, the customer will be charged 1.5% of the amount as e-levy but the trader will not be charged.

However, if a business or individual is registered with the Ghana Revenue Authority (GRA) and is compliant with all the tax requirements, any payment they get will not be subject to the e-levy.

Read Background Updates

Before the Proposed Reduction of e-Levy

Recall that this move is coming as a reprieve from the news making the rounds through the Finance Minister, Ken Ofori Atta during the presentation of the 2023 budget in Parliament that the government is likely to introduce a 2.5% increase in VAT rate.

He mentioned that the increment is intended to aid the roads sector and the government’s digitalization plan.

A change of order came when the General Secretary of the Great Consolidated Popular Party (GCPP), Citizen Ato Dadzie expressed outrage against this plan.

He rejected the proposed increment to avoid adding to the tax burden of taxpayers as the basic VAT rate is already 12.5%, except for supplies of a wholesaler or retailer of goods, which are taxable at a total flat rate of 3%.

According to the GCPP chieftain, this tax increase will have an adverse effects on the citizens as it is placing them in hardship.

He continued that the increment could potentially raise the prices of basic things that are used daily.

He then mentioned that although the increment could potentially affect the prices of imported goods which would encourage competition in the prices of locally produced goods, it is important that the government make more policies to motivate local producers.

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