Tag Archives: VAT

Politics

Govt to tax foreign incomes of resident Ghanaians to replace VAT on electricity

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The Government is seeking to plug the revenue gap created as a result of the abandoned VAT on electricity with a tax on the foreign incomes of resident Ghanaians.

At the beginning of the year, the government introduced a value-added tax on electricity, however, it was forced to abandon the initiative following a public backlash.

This created a revenue gap of about GHc 1.8 billion.
The government had planned to implement the VAT on electricity as part of revenue measures in the IMF deal but the initiative was abandoned after public resistance, leading to a revenue shortfall.

The government is confident that ensuring compliance with the tax on foreign incomes will close the revenue gap.

Ghana’s deal with the IMF entails certain expenditure rationalization and revenue measures to ensure fiscal consolidation of the economy.

To make up for this shortfall, the government says it will ensure compliance with the tax on foreign incomes of Ghanaians who reside in the country for 183 days or more.

“The alternative is a compliance measure on foreign incomes of resident Ghanaians. Not Ghanaians abroad. We want to make that clear. This is not a measure. It has been in the policy but its implementation has not been optimal.

We are happy to announce that we have put strong and structural measures in place to ensure that this yields the revenue of GHS 1.8 billion and beyond.”
The GRA boss also encouraged taxpayers to take advantage of the window created to get the interest on their accounts waived.

“Its implementation has begun because the team is mobilizing themselves and drafting the letters to be sent to individual account holders. So by the 2nd of May, those letters might have gone out.

If individuals come forward within three months and say that, this is the amount in this account, the interest on the account will be waived and that is the voluntary disclosure aspect of this measure”.

Meanwhile, Finance Minister, Dr. Mohammed Amin Adam wants Ghanaians to bear with the government as new measures are introduced to restore the economy

 

 

Source: Citi Newsroom

 

News, Topstory

Organised Labour to hit street on Feb 13 against VAT imposition on electricity

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Members of organised labour across Ghana have said they will lay down their tools on February 13 to protest against the government’s introduction of a 15 per cent value added tax (VAT) on residential electricity consumption.

The Secretary-General of the Trades Union Congress (TUC), Dr Yaw Baah, who addressed the media at a press briefing Friday afternoon said the decision had been taken by the leadership of organised labour during a closed-door session.

The decision to protest he said, was deemed necessary due to the government’s failure to address their grievances regarding the imposition of VAT on electricity usage.

As a result, he called on all workers in Ghana to begin wearing ‘red’ to work from Monday to send a strong signal to the government that they won’t compromise till the government drops the decision to impose VAT on electricity.

“Today we hear they have imposed VAT on books and soon it will be water and then it will be on how many children we can have,” Dr Baah said.

 

News

15% VAT on electricity not being charged – ECG MD

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The Managing Director of the Electricity Company of Ghana (ECG), Mr. Samuel Dubik Mahama, has clarified that the new Value Added Tax (VAT) on electricity consumers beyond the lifeline threshold is not being charged yet.

The Finance Ministry had already directed the ECG and the Northern Electricity Distribution Company (NEDCO) to implement the 15 percent tax from January 1, 2024.

But Mr Mahama says his outfit has not commenced charging electricity consumers, stating that there are legal and operational challenges associated with the implementation of the new tax.

In an interview with Citi FM, the ECG MD revealed that ECG is still in discussion with the Public Utilities Regulatory Commission (PURC) over the implementation of the 15% VAT.

“It is on record, we have not implemented it, and we are not charging it…There are some difficulties that have to be checked with the law so I don’t think that it is time for people to panic, it is not panic mode yet,” he explained.

Mr Mahama indicated that the issue “is a conversation being had, [and] might even reach a point where the whole law will be looked at and recrafted.”

TUC’s Concerns

Barely two weeks after the announcement of the new tax, the Trades Union Congress (TUC) had to vehemently oppose it, citing serious implications on Ghanaians.

On Tuesday, January 23, about 35 workers unions under the TUC held a press conference in Accra and gave the government a seven-day ultimatum to withdraw the imposition of the VAT on electricity consumption above lifeline.

The Secretary General of TUC, Dr. Yaw Baah at the press conference said the new tax was unacceptable especially as its impact was detrimental on the livelihoods of  pensioners and low-income earners.

Throwing more light on the impact of the VAT on electricity, TUC’s Deputy General Secretary, Joshua Ansah, emphasized that imposing such a tax is an inequitable method for the government to generate revenue.

“VAT is not the only thing the government can do to bring back the lights. I don’t think that is the only way the government can take to make the electricity supply stable when a lot of the population is suffering. This is not fair, and that is why workers are resisting it with all their might,” he said in an interview with Citi News.

“If you are bringing additional taxes or VAT, then it is an easy way for the government. There are other ways the government can use to raise revenue, and it must work harder. To be burdening workers every day is not fair,” Mr. Ansah added.

 

Source: Myxyzonline.com

News, Topstory

You have 7 days to revoke VAT on electricity – TUC to government

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The Trades Union Congress (TUC) has issued a seven-day ultimatum to the government, demanding the withdrawal of the imposition of Value Added Tax (VAT) on electricity consumption beyond the lifeline threshold.

The General Secretary of TUC, Dr. Yaw Baah stressed on the detrimental impact of this move on the livelihoods of ordinary Ghanaians, particularly pensioners and those with low incomes.

During a press conference on Tuesday, January 23, Dr. Baah emphasised that the impoverished population in the country cannot afford to bear the additional tax burden.

He called on the government and its agencies to promptly retract the implementation of the proposed tax.

“It’s always the poor people in this country, including pensioners, who bear the brunt. And we should not allow that to continue. Organised Labour, we have come together and our message to the government is very simple, we cannot pay VAT on electricity.

“We will not pay it today or tomorrow. Organised Labour is demanding the immediate withdrawal of the letter, and another directive from the Finance Minister to Ghana Grid Company (GRIDCo), ECG to stop the implementation of the VAT on electricity. We are giving the government, up to January 31, 2024, to withdraw the letter,” Dr Yaw Baah said.

He emphasised that they would take the necessary action if the Finance Minister does not instruct GRIDCo and ECG to retract the letter.

“If by that time the Minister of Finance fails to give directive to GRIDCO and ECG, we will advise ourselves,” he said.

In a letter dated January 1, Finance Minister Ken Ofori-Atta instructed the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to implement the VAT, with the goal of generating revenue for the COVID-19 recovery programme.

The government has outlined the rationale for the imposition of a 15 percent VAT on electricity consumption.

This measure is part of the government’s COVID-19 recovery programme, aiming to generate additional revenue.

Deputy Energy Minister Agyapa Mercer speaking in an interview with Citi FM on Monday, January 15, emphasised that while it was a challenging decision, it is necessary to settle debts owed to independent power producers.

“Obviously, if you look at the scope of the tax and what it is intended to do—raise revenue to meet some obligations of the government in the energy sector—it will interest you to know that, as we speak, as of July 2023, the amount of money that we owe to the IPPs alone is in the region of GH¢1.7 billion.

Source: Joynews.com