Government Announces The Revision Of The Electronic Transfer Levy.

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The government has recently announced plans to revamp the Electronic Transfer Levy, also known as the e-levy, as part of its Medium-Term Revenue Strategy. This move aims to optimize tax policies for greater efficiency and effectiveness.

Initially introduced in May 2022, the e-levy imposed a 1.5% charge on electronic and mobile money transactions over ¢100 per day. The goal was to generate additional revenue from Ghana's informal sector. However, in January 2023, the rate was reduced to 1%. The e-levy included an exemption threshold for transactions below ¢100 a day, although inflation has eroded its value over time.

The e-levy has sparked intense public debates regarding its impact on Ghana's public finances, the poor, and mobile money usage. Recognizing the need for a more forward-thinking approach to taxation in the digital age, the government has decided to comprehensively redesign the levy. This overhaul aims to modernize revenue collection methods while ensuring a fair distribution of the tax burden across different sectors of the economy.

As part of the medium-term revenue strategy, various reforms will be implemented. One important aspect is expanding the withholding tax regime to cover different tax types. This reform will enhance taxpayer identification, facilitate efficient tax collection, and simplify filing processes, particularly for individuals in the informal sector.

Streamlining tax returns and reviewing the modified taxation system are also key components of the strategy. The goal is to reduce tax avoidance and encourage voluntary compliance. Outdated tax categories such as stamp duty, income tax stamp, and vehicle income tax will undergo thorough review to align them with current market dynamics.

The strategy also includes improving the taxation of rental income to ensure a fair contribution from this sector. Moreover, it involves implementing taxation on Gross Gaming Revenue (GGR) for industry players and introducing withholding tax on winnings, promoting a more comprehensive and equitable tax structure.

Overall, these proposed changes aim to enhance the effectiveness of taxation policies, modernize revenue collection methods, and ensure a fair distribution of the tax burden. By streamlining processes and reviewing outdated tax categories, the government is taking steps towards optimizing tax policies in Ghana.

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