Ghana passes Electronic Transaction Levy amid Controversy

Ghana has passed the electronic transfer levy (e-levy) invoice which has been a topic of controversy in the previous month in the country.

The parliament handed the invoice at a 1.5% tax levy (down from 1.75%) on the electronic transfer of cash throughout diverse structures after a walkout by the minority group who did not want the bill passed in the House.

The bill will commence full operation after the assent of the President.

The Minister told the Parliament that it is becoming clear that bringing transactions that are best described as informal economy transactions into the tax bracket has tremendous potential to increase tax revenues.

He said, “After considerable deliberations, the Government has decided to place a levy on all electronic transactions to widen the tax net and rope in the informal sector. This shall be known as the Electronic Transaction Levy or e-Levy.”

“Electronic transactions covering mobile money payments, bank transfers, merchant payments, and inward remittances will be charged at an applicable rate of 1.75%, which shall be borne by the sender except for inward remittances, which will be borne by the recipient.”

The Minister reported that the total value of transactions for 2020 was calculated to be over GHS500 billion compared to GHc78 billion in 2016; just 5 years ago, while total mobile money subscribers and active mobile money users have grown by an average rate of 18% and 16% respectively between 2016 and 2019.

Key factors to note

According to Ken Ofori-Atta, the Finance Minister, the newly electronic transaction tax will help the country raise millions of dollars in revenue as the Covid-19 pandemic improved digitalization which has resulted in a greater than 120% growth Increase in the value of digital transactions in the country as of February 2021.

* Nevertheless, this did not sit well with some citizens who felt that the country is tough enough due to the increasing cost of living and high fuel prices due to the Russia-Ukraine war.

* Ghana Revenue Authority has already published actions for the implementation of the e-levy even before the bill was passed.

 The new tax levy will be acceptable on every mobile money payment, bank transfer, merchant payment, and inward remittances and will be borne by the originator of the transactions except in the case of inward remittance which the recipient would have to bear the cost.

However, there is an exception for transactions up to GHc100 ($16) per day.