Business / Agribusiness Economy

Government Embarks on Extensive Redesign of the E-Levy

Government Embarks on Extensive Redesign of the E-Levy

The government has unveiled a significant overhaul of the Electronic Transfer Levy as part of its Medium Term Revenue Strategy, demonstrating a dedicated effort to enhance the efficiency and effectiveness of this taxation policy.

In May 2022, the government introduced the unpopular e-levy, a tax on mobile money transactions. Initially, it was structured as a 1.5% charge on all electronic and mobile money transactions over ¢100 per day, aimed at increasing government revenue by taxing the informal sector more.

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However, in January 2023, the government reduced the tax rate from 1.5% to 1%. While the unique feature of exempting transactions below ¢100 a day may eventually be removed, it remains in place for now, though its real value has diminished due to inflation over the past year.

The impact of the levy on Ghana’s public finances, its impact on low-income individuals, and mobile money usage has sparked intense and polarizing public debates, often lacking empirical basis.

The comprehensive redesign of the Electronic Transfer Levy reflects a forward-thinking approach to taxation in the digital age, aligning with the government’s broader strategy to modernize revenue collection methods and distribute the tax burden equitably across various sectors.

Other reforms outlined in the medium-term revenue strategy include:

  1. Expanding the withholding tax regime to cover various tax types, enhancing taxpayer identification, facilitating more efficient tax collection, and simplifying filing processes, especially for the informal sector.
  2. Streamlining tax returns and scrutinizing the modified taxation system to reduce tax avoidance and encourage voluntary compliance.
  3. Reviewing outdated tax categories like stamp duty, income tax stamp, and vehicle income tax to align them with current market dynamics.
  4. Enhancing the taxation of rental income to ensure a fairer contribution from this sector.
  5. Implementing taxation on Gross Gaming Revenue (GGR) for industry players and introducing withholding tax on winnings to establish a more comprehensive and equitable tax structure.

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