Ghana Finally Approves Controversial E-Levy Law
Ghana ’s Parliament has authorized the contentious e-levy. Prior to the voice vote, the Minority in Parliament walked out of the proceedings. The Minority asserts that they do not wish to be identified with the levy.
Haruna Iddrisu, Minority Leader, emphasized his party’s opposition to the bill and accused the government of smuggling it in.
“When the business statement was presented last week, it [e-levy] was not part of the business approved for the house”, he observed. “We have warned time and again and cautioned that we do not want to be taken by surprise on a major economic policy of the government. Parliament cannot be that when a side is convenient with its number, then business can go on. It cannot be. We will not accept that culture. So, when they [Majority] did not have the numbers, they weren’t ready. Now, that they have the numbers, then you say we should do business.”
The new levy is a 1.5 percent charge on the value of electronic transactions. 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.
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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.
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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 writer