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In a step towards optimizing taxation policies for greater efficiency and
effectiveness, the government has announced plans for a substantial overhaul of
the Electronic Transfer Levy as part of its Medium-Term Revenue Strategy. The
levy, commonly known as the e-levy, was introduced in May 2022 as a tax on
mobile money transactions.
Initially set at a 1.5% charge on electronic and mobile money transactions over
¢100 per day, the e-levy aimed to generate additional revenue from Ghana's
informal sector. However, in January 2023, the rate was reduced to 1%. The levy
included an exemption threshold for transactions below ¢100 a day, although its
value has been eroded by inflation over time.
The effects of the e-levy on Ghana's public finances, its impact on the poor,
and mobile money usage have fueled intense public debates. The comprehensive
redesign of the levy represents a forward-thinking approach to taxation in the
digital age as the government seeks to modernize revenue collection methods
while ensuring equitable distribution of the tax burden across different
sectors of the economy.
The medium-term revenue strategy encompasses various reforms, including the
broadening of the withholding tax regime to cover different tax types. This
aims to enhance taxpayer identification, facilitate efficient tax collection,
and simplify filing processes, particularly for individuals within the informal
sector.
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Streamlining tax returns and reviewing the modified taxation system are also
critical aspects of the strategy, aimed at reducing tax avoidance and
encouraging voluntary compliance. Outdated tax categories such as stamp duty,
income tax stamp, and vehicle income tax are subject to thorough review to
align them with current market dynamics.
Additionally, the strategy focuses on improving the taxation of rental income
to ensure a fair contribution from this sector. It also includes the
implementation of the taxation on Gross Gaming Revenue (GGR) for industry
players and the introduction of withholding tax on winnings, promoting a more
comprehensive and equitable tax structure.
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