The E-Levy and its Implications for businesses - key insights from UKGCC’s latest webinar

The e-levy, a trending topic in national discourse, is poised to extensively impact the business community upon its implementation on 1st May 2022.

The 5th session in the UKGCC’s Quarterly Dialogue Series, moderated by PwC Ghana’s Abeku Gyan-Quansah with a panel consisting of Isaac K. Amoako, Head of Project Management, Transformation Office, GRA; Alexander Fiifi-Yankson Jr, Tax Services Manager, PwC Ghana; and Daniel Nuer, Head of Tax Policy Unit at the Ministry of Finance, discussed the e-levy and highlighted what businesses and individuals should take note of.

Here are some key insights from the webinar.

What is the E-Levy?

In his opening statement, Mr. Nuer remarked that the E-levy is what some call ‘new thinking because you cannot situate it as a purely consumption tax or as an indirect tax on transactions, or as an income tax on your income or some wealth tax as people choose to call it… so it falls in between those two things, a pure transaction tax and a tax on a transfer”.

The Ghana card is the only recognised identifier that will be used. The legal basis for this regulation has existed since 2012.

What is the purpose of the E-Levy?

The crux of the e-levy is to raise revenue and widen the tax net. Mr. Nuer said it is expected that the e-levy will generate “additional income that will help us to achieve our revenue targets.” The revenue generated from the e-levy is also expected to help improve youth employment efforts and road infrastructure, support digital transformation and cyber security and a number of other government initiatives.

Implications for Businesses

A key implication of the law is that the GRA will not charge individuals an e-levy if the establishment they’re doing business with is registered with the GRA for income tax or VAT.

According to Mr. Nuer, this is a strategy to influence customer behaviour.

“You might have a taxpayer identification number but if that commercial establishment is not registered with GRA for income tax or VAT, your clients do not get the benefit of the exclusion of the e-levy; your clients will pay the e-levy”, he said.

He urged businesses to ensure that they always comply with tax laws “so that when something like this happens and the policy has a foundation which already exists, we don't get ourselves or our fingers bent.”

What is the GRA’s role?

Mr. Isaac Amoako remarked that the e-levy will only be applied on transactions deemed to be electronic transfers.

The GRA has, therefore, been working with charging parties to determine which transactions can be deemed as electronic transfers, in addition to engaging with charging parties and key stakeholders such as telcos and bankers, to ready them for 1st May.

The GRA has also built “a common platform that will serve as an adjudicator because the law imposes a certain obligation” when a transfer is made. This adjudicator, in the form of a middleware, will identify the beneficiary of the transfer, and set a minimum threshold of GHC100.00 a day across all mobile money platforms a person owns.

Mr. Amoako assured participants that the GRA is working on the administrative guidelines that will guide the public to be compliant with the new law.

Some other pertinent Questions

Fielding questions on how long it will take the GRA to remit collected levies to the central government, Mr. Amoako responded that the GRA intends to use its “cashless project” approach to remit payments in 24 hours or less.

Taking cognizance of the possibility of wrongful charges due to system errors, the GRA believes charging entities will be capable of making refunds (money and e-levy charge) automatically when the error is acknowledged before the Bank of Ghana (BOG) receives the levy. The GRA is also working on an automated system that would leverage on existing refund policies to make refunds within 15 working days, in instances where the error is acknowledged after the levy has been sent to the BOG.

Mr. Alexander Fiifi-Yankson Jnr raised a number of questions, such as whether refunds would be made should the injunction hearing against the e-levy prove successful. These questions notwithstanding, Mr. Nuer assured participants that stakeholders are working to ensure the implementation of the law is fair to the government and the tax paying public.

The panel also discussed whether the e-levy will be an item on the VAT invoice, the definition of specified merchant payments, and the implication of the e-levy on insurance payments among others.