E-levy requires further deliberations, analysis- Dr.Ali-Nakyea
According to him, there is the need for Government to also analyze the impact of the E-levy on financial inclusion and successful mobile money interoperability.
A Tax Expert and Lecturer at the University of Ghana School of Law, Dr. Abdallah Ali Nakyea has called for further deliberations and analysis on the Electronic transaction levy.
According to him, there is the need for Government to also analyze the impact of the E-levy on financial inclusion and successful mobile money interoperability.
Speaking at a virtual joint meeting organized by the Rotary Club of Spintex on the topic: E-LEVY-THE WHAT, THE WHY AND THE HOW, Dr. Nakyea mentioned Identification of the taxpayer and monitoring the threshold of transfers made, The collection mechanism of the tax, and record-keeping for tax audit purposes, and the scope of the exemptions as some of the challenges associated with implementing the policy.
“This is a policy that requires further deliberations and analysis, hence not ripe for implementation in the state in which it has been proposed.
“As indicated elsewhere earlier, if the idea, as espoused in paragraphs 307 to 314 of the 2022 Budget Statement, is to deal with the ‘shadow economy” (para. 314), looking at the total value of transactions estimated at GHS500 billion in 2020 (par. 312), digital transactions (par. 310), then there is a challenge in using taxation in this manner.”
“There is the need to analyze the impact of the E-Levy on financial inclusion and the successful mobile money interoperability that people are relying on. (Tanzania and Kenya are countries where such studies have been done and can offer Ghana some guidance).”
Furthermore, he wondered why Government would not consider a review of the Communication Service Tax rather deal with the purported creation of employment and handling the cyber security space
“If it is about the informal sector, the modified taxation system has been identified as capable of dealing with the sector’s contribution to revenue mobilization.
“If it is about raising revenue for creating employment and handling the cyber security space as some of the purposes of the use of the revenue, one will ask what has happened to the communication service tax also for the same purposes?”
“Is it not possible to then rather consider reviewing the communication service tax, since the mobile money platform hinges on that as well?”
Moreover, Dr.Nakyea called for a second look at the current rate of 1.75%.
“Even after the challenges have been addressed and a consensus reached, a second look at the rate of 1.75% is necessary, as was heard of being reduced to 1.5%.
“For a start, a rate of between 0.5% and 1% could be considered. This is because most of the countries with a rate above 1% have the rate applied on the service fees, whereas those with a rate between 0.2% to 0.5% have it being applied on the value of the transaction. “
“This can be reviewed as the years go by after the impact analysis start trickling in, so the situation of introducing tax handles and withdrawing or abolishing them does not arise,” he noted
