Ghana’s finance minister, Ken Ofori-Atta, has declared that an electronic transaction levy (e-levy) will be introduced in the 2022 budget.
The proposed levy is a 1.75 percent charge on the value of electronic transactions that will take effect on February 1, 2022. It includes payments made with mobile money, bank transfers, merchant payments, and inward remittances. Except for inward remittances, which will be borne by the recipient, the charge will be borne by the transaction’s originator. For transactions up to GH100 (US$ 16) every day, there is an exception.
According to the Finance Minister, total digital transactions are expected to exceed GH500 billion (US$81 billion) in 2020, up from GH78 billion (US$12.5 billion) in 2016. In just five years, the company has grown tremendously.
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While the premise for this new fee is to broaden the tax net, given that the bulk of the population works in the informal sector, it appears to be a simple way for the government to raise income. The news of the levy was met with anger and concerns that it might jeopardize the country’s existing digitization effort.
A Suspended 9% Communication Service Tax
Last year, Ghana’s Communications Ministry ordered Mobile Network Operators (MNOs) to stop passing on the 9% Communication Service Tax (CST) to subscribers.
In a letter addressed to the National Communications Authority (NCA), and published in full below, the Communications Ministry stated that the CST should be treated the same way VAT, NHIL, GETFUND levy and all other taxes and levies imposed on entities doing business in Ghana were treated.
Before the suspension, MTN, AirtelTigo, Vodafone and Glo were charging their customers the full amount of the revised Communication Service Tax (CST) since October 1, 2019.
The CST, which was increased from 6% to 9%, and applied to any recharge purchase by subscribers. For every GH¢1 of recharge purchased, a 9% CST fee was charged the subscriber leaving ¢0.93 for the purchase of products and services.
In 2018, the CST tax was first introduced at an Ad Valorem Rate of 6 per cent.
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The Commissioner-General of the Ghana Revenue Authority, Ammishaddai Owusu-Amoah also recently said the agency had not started taxing e-commerce in the west African country.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning write