Ghanaians have been offered some relief as the government takes steps to cut the Electronic Transactions Levy (E-levy) from 1.5% to 1%.
This was contained in the 2023 Budget Statement and Economic Policy presented by Finance Minister Ken Ofori-Atta to Parliament on Thursday, November 24, 2022.
The sector minister also mentioned that the government would also remove the daily threshold on all transactions.
According to the minister, the review was part of a “seven-point agenda aimed at restoring macroeconomic stability and accelerating our economic transformation”.
E-Levy is a tax applied on transactions made on electronic or digital platforms.
The tax is one of the measures the government introduced to increase the country’s tax-to-GDP ratio from 12 5% in 2021 to 20% by 2024.
The government said it would use the revenue for entrepreneurship, youth employment, digital infrastructure and cyber security, and the provision of road infrastructure.
The government presented it as the panacea for the country’s economic challenges, but a month after its implementation, it failed to yield the projected revenue.
The minister admitted that the levy, introduced in May 2022, has not yielded the resources as expected, adding that stakeholder engagements are still ongoing.
This review is the second for the levy after initially being pegged at 1.75 per cent before the government reduced it in a compromise.
Mr Ofori-Atta further assured that the government is working to change the narrative and build a better future despite the glaring hardship.
“We will, among other things, boost local productive capacity. The government will also cut imports of public sector institutions that rely on imports either for inputs or consumption by 50 per cent and will work with the Ghana Audit Service and the Internal Audit Agency to ensure compliance.
“We will support the aggressive production of strategic substitutes, including the list disclosed at the President’s last address to the nation. We will also support large-scale agriculture and agribusiness interventions through the Development Bank Ghana and ADB Bank.
“We will again introduce policies for the protection and incubation of newly formed domestic industries to allow them to make the goods produced here competitive for local consumption and also for exports,” the minister added.
The E Levy is charged at the rate of 1% on the following transactions:
•Mobile Money transfers done between accounts on the same electronic money issuer
•Mobile Money transfers from an account on one electronic money issuer to a recipient on another electronic money issuer
•Transfers from bank accounts to mobile money accounts
•Transfers from mobile money accounts to bank accounts
•Bank transfers on an instant pay digital platform or application originating from a bank account belonging to an individual are subject to a threshold to be determined by the Minister of Finance.
However, not all transfers will be affected by the E Levy.
The levy does not apply to the following types of transfers:
• A cumulative transfer of One Hundred Ghana Cedis a day made by the same person
•A transfer between accounts owned by the same person
•A transfer for payment of taxes, fees, and charges on the Ghana.Gov System or any other Government of Ghana designated payment system
•Specified merchant payments
•Transfers between principal, agent, and master agent accounts and
•Electronic clearing of cheques
The Charging Entities are:
- Electronic Money Issuers
- Payment Service Providers
- Banks
- Specialized Deposit-Taking Institutions
- Other Financial Institutions are prescribed by Regulations made under the Act.