The Nana Addo Dankwa Akufo-Addo government received a lot of applause for not introducing new taxes after the presentation of the Budget Statement and Economic Policy for the 2024 fiscal year in November 2023 by the Minister for Finance, Ken Ofori-Atta.
The minister indicated that the Akufo-Addo government has listened to the plight of Ghanaians and would not push more taxes down their throats because of the prevailing economic hardship. He essentially said that the government would improve the implementation of the existing taxes to make them more efficient.
Below are highlights of tax measures in the 2024 budget statement:
a) Implementation of measures to improve the VAT regime
Notwithstanding the efforts made by the government so far, there still exists a significant VAT gap that needs to be urgently addressed to improve revenue performance. In this respect, the following measures will be put in place:
i. The commissioner-general’s certified invoice will be the basis for all deductible expenses for income tax purposes;
ii. the second phase of the electronic invoicing system (e-VAT) covering six hundred large taxpayers and more than two thousand small and medium taxpayers will be implemented;
iii. the implementation of the upfront VAT on imports of Vatable goods by unregistered importers will continue;
iv. A VAT flat rate of 5 percent will be introduced to replace the 15 percent standard VAT rate on all commercial properties to simplify administration and enhance revenue mobilization; and
v. some VAT exemptions will also be reviewed to reduce distortions and abuses in the system.
b) Harmonisation of the VAT Act and Customs legislation
c) The implementation of the Communications Service Tax (CST)
d) Property rates administration
e) Revision in the stamp duty rates
f) Implementation of a modified taxation scheme for individuals in the informal sector
g) The tax-free portion of the individual income tax rates to be realigned with the agreed minimum wage
h) Revision in the excise duties rates on beer and expand the scope of the Environmental Excise Duty
The government announced several tax reliefs for Ghanaian businesses and households. The minister said, “The various tax reliefs were proposed to ameliorate some burdens from some industries and taxpayers” and went ahead to list the reliefs as follows:
i. Extension of zero rating of VAT on locally manufactured African prints for two (2) more years;
ii. Waiver of import duties on import of Electric Vehicles (EVs) for public transportation for 8 years;
iii. Waiver of import duties on Semi-Knocked Down (SKD), Completely Knocked Down (CKD), and Fully-Built Units (FBU) of EVs imported by registered EV assembly companies in Ghana for 8 years;
iv. Extension of zero rating of VAT on locally assembled vehicles for 2 more years:
v. Zero rating of VAT on locally produced sanitary pads;
vi. Granting of import duty waivers for raw materials for the local manufacture of sanitary pads;
vii. Granting of exemptions on the importation of agricultural machinery, equipment and inputs and medical consumables, raw materials for the pharmaceutical industry.
viii. Waivers of import duties on vehicles to Doctors
Taxes the government has introduced now:
Fast forward to the beginning of 2024, Ghanaians now have to grapple with tax measures they did not even know or were explicitly mentioned by Ofori-Atta during the budget presentation.
VAT on electricity consumers
A leaked letter from the Ministry of Finance showed that the government has been changing Value Added Tax (VAT) on a section of electricity consumers in the country since the beginning of January 2024, which infuriated a lot of Ghanaians includingorganizeddlaborr who have threatened to embark on strike action if the tax is not scrapped.
The letter, which was signed by the Minister for Finance, Ken Ofori-Atta, and addressed to the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO), indicated that the VAT would be for residential customers of electricity above the maximum consumption level specified for block charges for lifeline units.
It said that VAT forms part of the implementation of the country’s Covid-19 recovery programme and should be charged starting from January 1, 2024.
“As part of the implementation of the Government’s Medium-Term Revenue Strategy and the IMF-Supported Post Covid-19 Programme for Economic Growth (PC-PEG), the implementation of VAT for residential customers of electricity above the maximum consumption level specified for block charges for lifeline units in line with Section 35 and 37 and the First Schedule (9) of Value Added Tax (VAT) Act, 2013 (ACT 870) has been scheduled for implementation, effective 1st January 2024.”
“For the avoidance of doubt, VAT is still exempt for “a supply to a dwelling of electricity up to a maximum consumption level specified for block charges for lifeline units” in line with Sections 35 and 37 and the First Schedule (9) of Act 870,” the letter further clarified.
The government also started implementing the Emissions Levy, on Thursday, February 1, 2024.
The levy forms part of government efforts aimed at tackling greenhouse gas emissions while promoting environmental and eco-friendly technologies to achieve net zero targets.
For instance, users of motorcycles and tricycles are required to pay GH¢75 per annum for the levy.
Motor vehicles, buses, and coaches which are up to 3000 cc will pay GH¢150 per annum, while motor vehicles, buses, and coaches above 3000 cc, cargo trucks, and articulated trucks will pay GH¢300 per annum.
See the list below as published by the GRA:
- Motorcycles & tricycles – GH¢75 per annum
- Motor vehicles, abuse, and coaches up to 3000 cc – GH¢150 per annum
- (i) Motor vehicles, abuse, and coaches above 3000 cc – GH¢300 per annum
(ii) Cargo trucks and articulated trucks – GH¢300 per annum