By Adu Koranteng
The Member of Parliament for the Dormaa East Constituency, Paul Twum Barimah has indicated that the Electronic Transaction Levy, popularly known as E-Levy will boost Ghana’s COVID recovery economy just like other countries that have introduced it.
According to Paul Twum Barimah, The electronic-levy is a tax measure introduced by the government in the 2022 Budget on basic transactions related to digital payments and electronic platform transactions, which includes financial technologies platform (FINTECH), E-Banking or Online banking and Mobile Money Payment gateways and platforms.
Honourable Twum Barimah, explained that aside Ghana other countries have also introduced or reviewed their taxes to help their economies recover from the covid trauma. He noted that Ghana is not the only country in the world that has introduced a new tax to help boost its economy after the covid strike. Countries like Argentina , Peru hiked taxes on the wealthy and high income earners . Indonesia extended its value added tax to digital companies to help pay for virus spending . Saudi Arabia for instance , trippled its value added tax rate to enable it maximise revenue to sustain its economy.
He indicated that Revenues from the levy will support government’s road constructions, employment for the youth and support the infrastructure of digital services, as well as helping entrepreneurship.
Revenue from the levy is expected to be mobilised by the government, through the Ghana Revenue Authority (GRA), that shall collect the E-Levy with the telecommunication agencies, financial technologies and financial institutions.
He said Ghana is now evolving in the digital transformation process and citizens are now getting to understand the concepts on electronic services. Parliament is expected to meet on 25th January 2022 to finalise discussions on the E-Levy and passed it for implementation.
The new electronic levy of 1.75 per cent is designed to be applied to transactions that are more than GH¢100.00 on a daily basis (24 hours).
This has been scheduled in such a way that with every transaction of GH¢100.00 by a user, the E-levy deduction to government applied.
The electronic levy consist of All Person to Person (P2P) mobile transactions (i.e the sending of funds to another account, payment for goods and services, payment of utilities (please note that payments for government fees and charges; are exempt), and All Business to Business B2B Mobile Transactions.)
All points of service (POS)/merchant payments; and all inward remittances (to be borne by the recipient) are included.
Meanwhile transfers from personal wallets to bank accounts and vice versa will not attract this levy.
Also, there will be no tax or e-levy deductions effected on transactions initiated through the government Online Payment system, thus www.ghana.gov (GHANA.GOV).
Indications are that all payment for government services through ghana.gov.gh will not attract e-levy charges.
Meanwhile Trade Practitioner and AfCFTA expert, Louis Yaw Afful has opined that continental trading under the Free trade agreement would not be derailed by the introduction of the e-levy policy by government.
He explained that “the continental free trade area is not barring any country from doing something like that. In fact, Kenya is one of the countries that started this. These are internal means of generating of funds and does not infringe upon the activity of another member state by doing that.”
Mr. Afful however did say that “the only way it would have a negative impact on AfCFTA is where under the services sector such as telecommunications, different rates are applied for a Ghana-originating service provider and one from a different African country. That won’t be a fair practice under AfCFTA.”
The AfCFTA expert indicated that the e-levy policy has been introduced by government as an innovative way of widening the tax net.He said “because most of the trading in Ghana has been in the informal sector and government had to find ways to generate much internally. At the continental trading level this would not affect digital trading because the transaction is internal and not done at the border.”
Louis Yaw Afful, who is the Executive Director of the AfCFTA Policy Network (APN) said this move also aligns with the ambition for party states to increase internally generated revenues, as countries are to work towards 90% tariff liberalization.
He predicted that many countries participating in the AfCFTA would follow suit. Government intends to introduce an electronic transaction levy (e-levy) in the 2022 budget. He said this was to “widen the tax net and rope in the informal sector”.
The proposed levy, which will come into effect on 1 February 2022, is a charge of 1.75% of the value of electronic transactions. It covers mobile money payments, bank transfers, merchant payments and inward remittances. The originator of the transactions will bear the charge except for inward remittances, which will be borne by the recipient. There is an exemption for transactions up to GH¢100 (US$ 16) per day.
the total digital transactions for 2020 were estimated to be over GH¢500 billion (about US$81 billion) compared to GH¢78 billion (US$12.5billion) in 2016. Huge growth in just five years. While the justification for this new levy is to widen the tax net, since the majority of the population make a living in the informal sector, it seems a convenient means to increase government revenue.
Estimates show that in 2020, the total volume of mobile money transactions was over US$99 billion (GH¢561 billion) far surpassing cheque and cash transactions which stood at US$29 billion.
Research reveals that Countriesuh like Kenya , and Uganda on the African Continent have successfully introduced and implemented electronic transaction levy to boost their domestic revenue sector.
