Banks in Ghana have sent final notices to all customers ahead of the 1st May implementation of the infamous Electronic Transactions Levy (E-levy).
The information from the banks to customers indicates that effective Sunday, 01/05/2022, the E-levy charges on affected transactions will take effect.
The Electronic Transactions Levy (E-levy), which is a 1.5% fee, will be charged on electronic money transfers. The transactions affected according to the message sent to customers include wallet-to-bank transfers, bank-to-wallet transfers, and bank-to-bank transactions.
The reaction of the public to the E-levy implementation will be felt after the May Day and Ramadan Holidays. It is anticipated that customers who want to avoid the E-levy will opt for transacting many of their businesses in the banking halls through cash deposits, withdrawals, and cheques.
The fight by the minority in parliament to prevent the E-levy lingered on for long, but finally, the bill was passed and President Nana Addo signed the bill into law.
Final Update Ahead of E-levy Implementation
The Ghana Revenue Service, Banks, and Telcos are major stakeholders who have been charged to see the smooth introduction and operationalization of the law. The E-Levy is expected to rake in some GHS 6.9 billion (US$1.1 billion) which would help deal with the country’s 2022 budged deficit to a large extent.
The E-levy will also affect all daily transactions made through Mobile money that exceed GHS100.00. However, the Ghana Revenue Authority has indicated the transactions which will be excluded from the e-levy charges include salaries paid through Momo.
The objectives for the introduction of the E-levy is the government’s inability to collect tax revenues as many Ghanaian businesses and workers operate in the informal sector, which has not been captured by the tax systems of the country. The E-Levy when operationalized on 1st May 2022 is expected to improve the country’s domestic tax mobilization. This would further expand the tax base of the country and bring further ensure all persons living in Ghana contribute toward national development.
The government has disclosed that, the country needs the E-levy to turn its fortunes around and that, the country’s failure to implement the e-levy will lead to the stagnation of the economy.
When the E-levy collection starts on May 1 2022, Mobile money service providers such as MTN Momo, Vodafone Cash, AirtelTigo Money, Zeepay, and GCB G-Money will play an important role in ensuring that clients who use their services are dully charged for the transactions covered by the levy.
eTranzact, JuniPay, Korba, Nsan, and others who are Payment Service Providers (PSPs) would also be required to charge the E-levy as required by the law on services they provide their customers.
Banks, Specialised Deposit-Taking Institutions as well as all other Financial Institutions prescribed by Regulations would have to comply with the directive and charge the Electronic Transaction Levy as required.
The GRA has also assured the banking population that the E-levy would not affect cash-in and cash-out transactions of Mobile money transactions. It has also indicated that schools that have a business mobile money merchant wallet and transfer funds from it to its staff will have to pay the 1.5% E-levy charges when such transfers are made. To ensure fairness of the system, the schools can capture such charges as allowable expenses in their annual income statements. This will have no positive effect on implications where such schools are not duly registered and do not pay taxes to the country, thus it will amount to bad debt for such schools.
Which transactions will be excluded from the E-levy?
The following transfers are excluded from the Levy:
- All electronic money transfers below GHS100 a day. Thus, if you send money electronically and that transfer is less than a total of GHS100.00 a day, you will not pay the 1.5% levy on the GHS100.00
- If you transfer money from one of your accounts to another using the electronic money transfer, the transfer will not be charged. However, the two accounts should be linked to the customer’s Ghana Card to qualify for this exemption.
- Persons who are transferring money electronically for the purposes of paying or meeting other tax obligations, fees, or for making payments via the Ghana.gov platform will be exempted from the E-levy charges.
- Cheque clearing which is done through the Electronic Clearing Systems by financial institutions is also exempted from the E-levy.
- When payments are made to businesses and organizations which are registered with the Ghana Revenue Authority and for the purposes of Income Tax or Value Added Tax will be excluded from the 1.5% E-levy charges.
- According to the Ghana Revenue Service, to ensure double charging of clients is avoided, all payments transferred electronically between agents, their principals, and via master-agent accounts will be excluded from the 1.5% E-levy charges.
Although the initial implementation is expected to have some challenges, continuous improvement and sensitization of the general public need to go on for the next six months. The government through the GRA and other stakeholders must be ready to resolve all challenges in record time if they ever arise. Failure to deal with these and improve the confidence of the citizenry in the systems will have a negative impact on the E-levy and may lead to user rejection and long queues in banking halls, as people may turn to manual processing and banking services to avoid the E-levy.
It is expected that banking halls will be taken over by customers in the coming days after the E-levy takes effect on 1st May 2022.
The entire nation is bracing itself for the E-levy implementation from May 1, 2022. While the government will be aiming at raising more revenue for developmental projects, many more Ghanaians will be waving their way through the E-levy to find ways to avoid it as much as possible. Are you fully ready to pay your E-levy? Time will tell its impact on our pockets.