News Guide Africa

Tag: Electronic Transactions Levy

  • E-levy collections amounted to GH¢1.19bn in 2023 

    E-levy

     

     

    Adnan Adams Mohammed

     

    The Electronic Transactions levy (E-levy) collections for the year 2023 stood at GH¢1.19 billion.

     

    This reflects remarkable increase in the collections compared to the previous year’s collection of GH¢106.79million, although, the 2022 collections was affected by other factors.

     

    However, the revenue line witnessed a decline at the beginning of 2023 due to a reduction in its rate from 1.5 percent to 1 percent. During the first quarter of 2023, the E-levy generated GH¢246.9million. Implementation of E-levy took effect on 1 May 2022. The E-levy charge covers mobile money payments, bank transfers, merchant payments, and inward remittances (Ghana Revenue Authority, 2022).

     

    “Last year, E-levy generated GH¢1.19 billion and as part of dealing with the job situation… unemployment situation, the government has committed funds through YouStart from this E-levy sources…to GEA and NEIP to address the unemployment situation in the country”, Dr. John Kumah, Deputy Minister of Finance, revealed last week.

     

    “I am happy to announce that institutions like Wealth and Jobs Expo and all private groups that are willing to help create jobs in the private sector will also be supported to help create jobs and businesses in the private sector.”

     

    The Ghana Statistical Service last week announced that about 1.5 million Ghanaian youth are unemployed.

     

    Dr. John Kumah in response to the latest figures from the Ghana Statistical Service on the unemployment indicated that, to help ameliorate the situation, government allocated funds from the E-levy collection to the YouStart Programme, the Ghana Enterprise Agency, and the National Entrepreneurship and Innovation Programme to combat unemployment in the country.

     

    He further highlighted the government’s efforts in attracting investments into the country while spurring job creation, emphasizing the need for belief in entrepreneurship to address the unemployment rate.

     

    “In the medium term, the government aims to intensify efforts to attract domestic investments and FDIs [Foreign Direct Investments] in strategic centres with emphasis on creating jobs anchored on the government’s growth strategy. The strategy is projected to contribute to the creation of approximately 500,000 jobs.

     

    “We are not saying 1.5 million [unemployed youth], every one of them should create jobs. No. Even if we get it, we get 10% of them, it’s 150,000 who will become entrepreneurs. If they do an average of let’s say 100 jobs….150,000 x 100, you have almost solved the unemployment problem,” the Deputy Minister of Finance added.

     

     

     

  • Ghanaians call for massive reduction in e-levy rate

    Ghanaians call for massive reduction in e-levy rate

    Section of Ghanaians have called for a massive reduction in the rate of the Electronic Transaction Levy (E-levy) to encourage willingness to pay.

    Sharing his expectations, the Director of the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana advised government to use the 2023 Budget as a big opportunity to correct the policy by reducing the rate significantly to encourage the public to pay the tax.

    He maintained that the budget gives government a unique chance to rebuild confidence in Ghanaians, by listening to the public through a reduction in the e-levy.

    “E-levy can be made better. It can be made more efficient. Let us reduce the rate to 0.5% and I am sure we can raise a lot of revenue,” Prof. Peter Quartey has said in Accra, last week, during a pre-budget discussion.

    The E-Levy, which was introduced in the 2022 Budget has performed poorly, raking in just about 10% of the expected revenue three months after its implementation. The levy, which was originally pegged at 1.75% was reduced to 1.5 percent after public agitations against the policy.

    Giving some more recommendations, Prof. Quartey stated that government can improve tax collection by bringing back road toll to improve revenue mobilisation.

    He pointed out that road toll is one of the most effective ways to collect and account for taxes.

    “I think that we can properly digitise road tolls through public-private partnership to make the collection of taxes effective. I think government must consider bringing the road tolls back”, he said.

    Also, the President of the Association of Ghana Industries (AGI), Dr. Humphrey Ayim-Darke also called for a reduction of E-levy to cushion the operations of businesses.

    He stated that the levy in its current state imposes extra burden on businesses, already struggling with the current economic conditions in the country.

    “The E-levy must be reduced”, he said, explaining that businesses and consumers will always find legal means to avoid taxes if it increases their economic hardship.

    “We think one place that can be improved is the VAT system. We must block the loopholes in our VAT system and not introduce new taxes like e-levy that is not working” he said.

    Dr. Ayim-Darke also called on the Finance Minister to reduce taxes on raw materials for industry.

    He stated that such a policy will strengthen the operations of local industries to be globally competitive.

  • 91% Ghanaians lack confident in judicious use of E-Levy funds – report

    91% Ghanaians lack confident in judicious use of E-Levy funds – report

    Adnan Adams Mohammed

    Ghanaians have registered their lack of trust in the government and fears the 1.5 per cent currently being charged on Electronic transactions (E-levy) will be used to fund development projects across the country an Afrobarometer Report has revealed.

    The survey report released by CDD-Ghana shows, out of the total sample size, only 9 percent of Ghanaians are confident that the government will use revenue from the E-levy to fund development. This means, about 91% Ghanaians have no confident in the government when it comes to judicious utilisation of tax monies.

    Amidst the high lack of no confident and on the issue of transparency, key stakeholders in the telecommunication space have advocated the rollout of measures and strategies that will inform people of how their taxes are being used.

    “I think it is fair to ask that if we’ve decided that we are taking this tax for a particular purpose, we are able to go back and see if it is being used for that particular purpose. For me, as a corporate governance student, I think that transparency and providing information, by the people who are in positions of responsibility is important”, Chief Executive Officer of the Ghana Chamber of Telecommunications, Dr. Ing. Kenneth Ashigbey, noted in a radio discussion last week.

    “And I don’t think we do enough of that. It is something we need to do constantly if we want to take out all the clouds and perceptions of suspicion. If we could even have a website that customers can go to find out with regards to how much is coming in and what the funds are being used for, it will be helpful,” he added.

    According to the Afrobarometer report, 51% of Ghanaians do not think government will invest the proceeds generated from the E-levy into development projects.  The report indicates that 24% of Ghanaians are not very confident that the revenue generated from the E-levy will be used for its intended purpose, while 15 per cent are somewhat confident that government will indeed use the accrued revenue for its purpose.

    Also, 47% of Ghanaians despite the charges on electronic transactions say they will continue to use electronic financial transactions.

    However, the report further indicated that, 49% of Ghanaians have disclosed that the E-levy will make them avoid or stop using electronic financial transactions.

  • Gabby’s E-Levy tweet: mind-game on Ghanaians for IMF program

    Gabby’s E-Levy tweet: mind-game on Ghanaians for IMF program

    Adnan Adams Mohammed

    A tweet of Gabby Okyere Darko, widely circulated on social media make a revelation that the Electronic Transaction Levy (E-levy) has so far generated only 10 percent revenue.

    The controversial E-Levy which was implemented in April has since generated only 10% of the targeted about GHC5.4 billion revenue for the year.

    Before the ‘schemed’ parliamentary approval of the most rejected tax policy in the fourth republic of Ghana’s democratic governance, some economists had advised the government to consider relief from the International Monetary Fund (IMF), but, the government ‘stubbornly’ refused to listen. So some policy analysts and journalists have described Gabby’s tweet as a mind game on Ghanaians to pave way for the government to announce an intent of going to the IMF since revenues are low.

    “After 5 months of stalemate and bashing, the e-levy, after implementation, is delivering only 10% of estimated revenues”, Gabby Okyere Darko’s, as in the most cases described as ‘De-facto president or Prime minister’ by social commentators, tweet captured. “Our revenues remain low as compared to the rest of the world; debt levels dangerously high, cedi, like most currencies, struggling against the US dollar.”

    A journalist with the Economy Times and www.newsguideafrica, Adnan Adams Mohammed, described the tweet as a mind-game on Ghanaians.

    He asserts that at this juncture government’s last resort is for IMF program to restore investors’ confidence as the government’s debt issuance both foreign and domestic has been receiving a poor response for past months as the dollar keeps bullying the cedi.

  • Exclude salary payments via MoMo from E-Levy – Telcos

    Exclude salary payments via MoMo from E-Levy – Telcos

    The Ghana Chamber of Telecommunications has called for a review of portions of the Electronic Transfer Levy (E-Levy) law to exclude the 1.5% charge on payment of salaries made via mobile money.

    According to the chamber, per the current law, salaries that are paid via mobile money would attract the 1.5% charge, whereas salaries paid through banks will not attract any E-levy. They described such move as discriminatory.

    The levy is a 1.5% tax on electronic transfers that include but not limited to, mobile money transfers done between accounts on the same network, mobile money transfers from an account on one network to a recipient on another network, transfers from bank accounts to mobile money accounts, and transfers from mobile money accounts to bank accounts. The charge will apply to electronic transfers that are more than GH¢100 on a daily basis.

    “Some of the challenges we have seen with the law, as has been passed, which we hope to take up, are a few discriminatory elements within what’s happening. For example, if your salary is paid from a bank account, it won’t attract the E-Levy, but if you are paid with mobile money, then it will attract the E-Levy. That definitely is not equitable and is discriminatory”, the Chief Executive Officer of the Chamber, Dr. Kenneth Ashigbey,said in an interview last week.

    “We hope that going forward, such issues will be addressed. We know that one of the elements of a good tax is that it should not be discriminatory, especially due to the channels that one uses. All of these are things we will be working on with government to ensure that the unintended consequences do not come and derail government’s own digitalization agenda that it’s put up,” he added.

  • E-Levy implementation: Telcos doubt meeting deadline to reconfigure their system before May

    E-Levy implementation: Telcos doubt meeting deadline to reconfigure their system before May

    Adnan Adams Mohammed

    Telecommunication operators in the country are in doubt over meeting the deadline to configure their systems to allow the smooth implementation of the Electronic Transactions Levy (E-Levy).

    The controversial E-Levy passed by parliament and assented into law by President, Nana Akufo Addo, late last month, is scheduled to take effect next month, May 2022. So the telecomm companies have within a period of one month to reconfigure their system to support the deduction of the tax on the transfers of funds in between mobile money wallets.  

    Although the telcos have assured to do their best to ensure the required systems are put in place to collect the E-levy, they say, the right infrastructure must be put in place, and tested to ensure that they are fit for purpose before going live.

    “I can’t say whether one month will be enough time for all of those systems [necessary] because if there are major variations that have been made, we’ll need to see whether all the things we were looking at, at the beginning could be done within months”, the Chief Executive of the Chamber of Telecommunications, Ing. Dr. Kenneth Ashigbey, said in an interview.

    “From our side, we will do whatever is possible. This is about money, and we don’t want a system where there will be a backlash on it. We need to make sure that we can do the integration with the GRA’s systems and do the user acceptance test and validation to make sure everything is well before we go live. We also know that Parliament has passed the law, and we need to work at that, but those considerations of the practicality of all of that have to be done.”

    After President Akufo-Addo assented into the E-levy bill last week, the various stakeholders are under pressure to put in place all the necessary infrastructure to ensure full implementation of the law.

    Dr. Ashigbey in an earlier interview said the full details of the bill are yet to be presented to the Chamber for studies, and it will only be after that, that they will decide and make public how they will implement the tax.

    “It was only preparatory engagements that were being done and not as if anybody is implementing anything. What Parliament passed is what becomes law. In terms of the engagements we had with GRA, that was the spirit of the fact that the Bill was before Parliament. Since we had those initial conversations, there hasn’t been any implementation.”

    “I have not seen the bill that has been passed, so we have not seen the date in there, so it will depend on what the GRA directs for our members to follow and configure their systems. So, there is still a lot to be done, and we are still waiting”, he said.

  • MoMo transactions in value decrease by 8% within two months space of e-levy standoffs

    MoMo transactions in value decrease by 8% within two months space of e-levy standoffs

    Adnan Adams Mohammed

    The Bank of Ghana’s latest figures indicate that the value of mobile money (MOMO) transactions in January this year saw an eight percent decrease, from the GHS82.9 billion recorded in December 2021 to record GHS76.2 billion.

    Also, the number of MoMo transactions also saw a drop from 401 million in December to 372 in January this year. This comes at the time of heated controversy surrounding the introduction of Electronic Transactions Levy which will have every MOMO transactions exceeding GHC300 to be taxed 1.75%.

    Mobile Money Interoperability also saw a 15 percent drop in volume from 12.2 million in December to 10.3 million in January. But, on ear-on-year basis, the Central Bank’s Summary of Macroeconomic and Financial Data report the total number of MoMo transactions increased from 301 million in January last year to 372 million in January this year. MOMO transactions for the first month of this year have risen by 13.6 percent year-on-year to GHS76.2 billion.

    “These reductions seem to be a result of reactions to the proposed electronic transfer levy, as government communications had earlier confirmed a reduction in the volumes if the tax policy is approved”, the Central bank indicated.

    Meanwhile, the value of Mobile Money Interoperability transactions also saw a whooping jump of over 130 percent from GHS906 million to over GHS2.1 billion between January 2021 and January 2022. Although it is observed that on a year-on-year basis, most of these transactions recorded an increase in value and volume between January last year and January this year, the figures decreased on a monthly basis.

    Even Ghana Interbank Payment and Settlement Systems (GHIPPS) Instant Pay, which has constantly seen a rise in volume over the past months saw a 14 percent decrease from 5,375 to 4,620.

    Players in the industry have hence predicted more decreases in the volumes and value of electronic transactions should the government go ahead to implement the electronic transfer levy.