Finance Minister Ken Ofori-Atta has announced a new 1.75 percent tax called E-levy on mobile money and all electronic transactions in the country as part of strategies to widen the country’s tax net.
According to Ken Ofori-Atta, this fee is to enhance financial inclusion and protect the vulnerable. Transactions covering mobile money payments, bank transfers, merchant payments, and inward remittances will have the levy imposed on them and will be borne by the sender.
“After considerable deliberations, the government has decided to place a levy on all electronic transactions to widen the tax net and rope in the informal sector.
This shall be known as the “Electronic Transaction Levy or E-Levy,” The Finance Minister said on Wednesday during the presentation of the 2020 Budget in parliament. However, the levy will be set aside for transactions that amount to GHS 100 or less in a day or approximately GHS 3,000 per month.
The government says portions of revenue collected from the levy will be used to support entrepreneurship, youth employment, cybersecurity, digital, and road infrastructure, among others.
It is the expectation of the government that the implementation of the new policy will come into force effective January 1, 2022, if the appropriation is passed. “Government will work with all industry partners to ensure that their systems and payment platforms are configured to implement the policy,” Ken Ofori-Atta added.
The Finance Minister said the total value of transactions for 2020 was estimated to be over GHS 500 billion as compared to GH¢78 billion in 2016, while total mobile money subscribers and active mobile money users have grown by an average rate of 18% and 16%, respectively between 2016 and 2019.
It is on the back of this that the government believes it is becoming clear there exists “enormous potential to increase tax revenues by bringing into the tax bracket transactions that could be best defined as being undertaken in the “informal economy.”