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Like Nigeria, Ghana introduces tax on electronic payments, targets $1bn revenue

Like Nigeria, Ghana introduces tax on electronic payments, targets $1bn revenue
March 30
12:28 2022

Ghana’s parliament has approved a new 1.5 percent tax on electronic payments, known as the “e-levy”, despite a walk-out by opposition lawmakers.

The bill was passed on Tuesday after it scaled through the second and third reading with a clear majority.

It now requires presidential assent to become law as the West African country targets GH¢7 billion (about $1bn) in revenue from the e-levy in 2022.

As is the case in Nigeria, the new tax — which had sparked a brawl in the Ghanaian parliament in December 2021 — covers mobile money payments, bank transfers, merchant payments and inward remittances.

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Members of the opposition refused to take part in the vote and staged a walkout while the bill was being debated.

The tax 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.

There is an exception for transactions up to GH¢100 ($16) per day.

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President Nana Akufo-Addo is expected to assent as the country moves to address fiscal challenges.

“Honourable members, the Electronic Transfer Levy Bill 2021 duly read the third time and passed,” Alban Bagbin, the speaker of parliament, said.

The initial proposed e-levy was to be at 1.75% of transaction values, but it was reduced to 1.5%.

The parliament had previously indicated that it would reduce the e-levy to 1.5%, which would trigger telcos to enforce a pre-agreed 25% reduction in P2P transfer fees.

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The Ghanaian government had announced a target of GH¢7 billion in revenue from the e-levy in 2022, and GH¢27 billion from 2023 to 2025.

It said the revenue generated from the tax would help to enhance the country’s economic recovery process.

According to Ken Ofori-Atta, Ghana’s finance minister, the new electronic transaction tax will help the country raise millions of dollars in revenue as the COVID-19 pandemic accelerated digitalization which has resulted to more than 120% increase in the value of digital transactions in the country as of February 2021.

Ghana’s revenue authority has already issued guidelines for the implementation of the e-levy even before the bill was passed.

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Last week, the government announced a 30% salary cut for its appointees to mitigate economic hardship in the country.

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