The government has announced a major overhaul of the Electronic Transfer Levy as part of its Medium-Term Revenue Strategy. This is a concerted effort to improve and optimize this taxation policy for greater efficiency and effectiveness.
In May 2022, the e-levy – a highly unpopular tax on mobile money transactions – was introduced. The levy was originally set at 1.5% for all electronic and mobile money transactions over ¢100 per day. It was designed to extract larger tax contributions from Ghana’s informal sector and raise more money for the government.
However, in January 2023, the government reduced the rate of the tax to 1%. The unique feature of the levy – an exemption threshold for transactions below ¢100 a day – is expected to be removed but remains in place for now, although its real value has been eroded by inflation over the past 12 months.
The levy’s effects on Ghana’s public finances, its poor, and mobile money usage have been the subject of intense and polarizing public debate.
This comprehensive redesign of the Electronic Transfer Levy may represent a forward-thinking approach to taxation in the digital age, and it aligns with the government’s broader strategy to modernize its revenue collection methods while ensuring that the burden of taxation is distributed equitably across various sectors of the economy.
The Medium-Term Revenue Strategy also includes several other proposed reforms, such as broadening the withholding tax regime, streamlining tax returns, and scrutinizing the modified taxation system to reduce tax avoidance and foster voluntary compliance. Additionally, outdated tax categories such as stamp duty and income tax stamp will be reviewed and updated to align with current market dynamics.
The strategy also aims to enhance the taxation of rental income and implement taxation on Gross Gaming Revenue (GGR) for industry players, as well as introduce withholding tax on winnings. All of these measures represent a significant step towards a more comprehensive and equitable tax structure.