Dr John Kumah

Government is projecting to get about ¢6.9 billion from the proposed tax on electronic transactions by end of 2022.

According to the Deputy Finance Minister, Dr John Kumah, this is based on initial projections done by revenue officials and the Ministry. 

He disclosed this when he appeared on PM Express Business Edition on November 18, 2021, with host George Wiafe.

On concern expressed by some analysts and tax experts, Dr. Kumah noted that government is committed to listening to all these views before it put in place the necessary regulations to guide the implementation of the levy.

Dr. Kumah noted that “this engagement with the necessary stakeholders could affect how the levy is applied.”

“For instance, some people have proposed capping the amount that the levy can be applied and we will look into that” the deputy minister added. 

Background 

Finance Minister, Ken Ofori-Atta in the 2022 Budget announced that announced government intention to place 1.75% tax on Electronic transactions. 

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

The Minister argued that, safeguard efforts being made to enhance financial inclusion and protect the vulnerable, all transactions that add up to GH¢100 or less per day (which is approximately GH¢3000 per month) will be exempt from this levy.

Introduction of the tax 

According to the Finance Minister, a portion of the proceeds from the E-Levy will be used to support entrepreneurship, youth employment, cyber security, digital and road infrastructure, among others

 He noted that “this new policy comes into effect from February 1, 2022 “adding that Government, therefore, calls on all industry partners to ensure that their systems and payment platforms are configured to implement the policy by February 1, 2022.

E-Levy and impact on financial inclusion and Mobile Money transactions 

There have been concerns that the introduction of this levy will affect financial inclusion and transactions on Mobile Money.

But Dr Kumah has maintained that will not be the situation, “insisting that the decision was based on research done by an independent firm that contracted by government”.

“This research actually involved about 10 thousand respondents in Ghana and did assess the impact of taxing electronic transactions, with the necessary recommendations and how the tax should be implemented to ensure that government gets the required taxes,” Dr Kumah noted. 

The Deputy Minister added a lot has gone into this policy and its introduction. 

The Minister added that the researchers noted that at the initial introduction of the levy, this will result in about 24 percent of mobile money users, redrawing from the service. 

However this is will just be for a while, but noted that at the end of the day Ghanaians will come to know that this thing was the best for us now. 

On improving revenue measures, the Minister was of the view that, this together with other compliance programs and making sure that more Ghanaians sign up for the Ghana card will bring more people into the tax basket.

Rising Debt stock and Expenditure 

The Minister disclosed that the government is committed to reducing the debt stock based on some measures that the ministry is taking to “bring the situation under control” like debt profiling.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.