E-Levy: No stakeholders consultation yet

Adnan Adams Mohammed

Stakeholders in the electronic transactions space have hit at the government for not consulting them throughout the process of the Electronic Levy proposal as announced as one of government’s economic policies in the 2022 budget statement. 

Unofficial information picked as at press time was that the finance ministry, after presenting the proposal was now preparing to meet selected stakeholders from the regulattory bodies, telecommunication companies, banks and the fintech operators on Friday, November 19, 2021 to now discuss what exactly the tax entails, how it should be calculated and implemented.

Already, the Ghana Chamber of Telecommunications has said that the introduction of the 1.75% levy on electronic financial transactions is ill-timed. It added that, the chamber was not consulted by the government on the proposal before the announcement was made in Parliament last week.

“When we got this information, it was surprising because there had not been any prior engagement to discuss this e-levy. The timing of taxing this nascent industry is not now, and we needed to let it [the industry] grow, defeat cash before we attempt any form of taxation,” Ken Ashigbey, Chief Executive Officer of the Ghana Chamber of Telecommunications has said. 

These act of negligence for not consulting key stakeholders in the policy formulation process have been criticised by other many industry experts. 

Finance Minister Ken Ofori-Atta announced a 1.75 per cent E-Levy on all electronic transactions, including mobile money, beginning January 2022, saying that Covid-19 and government’s digitalization program have boosted digital finance transactions exponentially, and it has now become necessary to tax those transactions.

The Minister said the plan is to rope in the informal sector into the tax net because a lot of financial transactions in that sector now take place on digital platforms via mobile money and other electronic wallets.

Meanwhile, Mr Ashigbey noted that, the chamber is looking forward to engaging the government and other stakeholders on the tax.

“The Minister of Finance made mention of the fact that in the deliberation on this tax, they sought to protect the government’s financial inclusion agenda as well as the vulnerable in society. He also added the fact that there would be engagement with industry, so we hope that this engagement with the Ministry and the GRA and other regulators will determine how this tax will be implemented,” he said.

Mr. Ashigbey further noted that there is a potential for “double taxation and also making the electronic purchase of goods and services very expensive,” which may encourage people to reverse to using cash.

It is still not clear how the 1.75% e-levy will be implemented. Already there is a 1% service fee on all mobile money and several other electronic transactions. The question still remains whether the 1.75% will be an addition to make the fee 2.75% or it will be calculated on the just the 1% fee.