This article is to guide you on what transactions e-levy applies to, as well as e-levy exemptions.
We have followed the developments carefully so believe us to bring to you all the needed information on this new levy on electronic transactions.
As we all know, tax is mandatory and compulsory. This means that when tax is imposed on you by the government through parliament, you will be compelled to pay, and any unlawful act to evade it will amount to a breach or violation of that particular law or statute that imposes it.
The obligation to pay comes out of the imposition by way of statute.
That is what the e-levy has successfully done, through the enactment of The Electronic Transfer Levy Act, 2022 (Act 1075).
The Electronic Transfer Levy Act, 2022 (Act 1075) which took effect in May 2022 was passed by Ghana’s Parliament on 29th March 2022.
It legally introduced the e-levy charge of 1.5% on all electronic transfers of money apart from those excluded by law.
Thus, when a person makes a transfer, the charging entity will add the Levy to the transfer amount and charge the person’s wallet or bank account.
According to the government, it passed this law to enhance domestic tax mobilization and expand the tax base as well as provide an opportunity for everyone to contribute towards national development.
It is important to note that The Ghana Revenue Authority (GRA) will collect and account for the Levy whilst the following will be responsible for charging the e-levy;
- Mobile money providers like MTN Momo, Vodafone Cash, AirtelTigo Money, Zeepay, GCB G-Money, and Yup Ghana, etc.
- Payment Service Providers (PSPs). They include eTranzact, JuniPay, Korba,Nsano etc.
- Banks like Consolidated Bank Ghana, GCB Bank, Agricultural Development Bank (ADB), etc.
- Specialized Deposit-Taking Institutions (SDIs) such as Rural and community banks, Savings and Loans Companies, Finance Houses, etc.
- Other Financial Institutions prescribed by Regulations.
Transactions that fall under e-levy
The following transfers fall under the E-Levy:
- Mobile money transfers done between wallets on the same electronic money issuer – For example, sending money from your MTN Momo wallet to another person’s MTN Momo wallet.
- Transfers from a wallet on one electronic money issuer to a recipient on another electronic money issuer – For example, sending money from your Vodafone Cash wallet to another person’s AirtelTigo wallet.
- Transfers from bank accounts to mobile money wallets: For example, Kofi transfers money from his CBG bank account to Ama’s G-Money wallet.
- Transfers from mobile money wallets to bank accounts: For example, Esi transfers money from her Zeepay wallet to Yayra’s bank account.
- Bank transfers on an instant pay digital platform or application which originate from a bank account belonging to an individual: For example, Kwame transferred money from his ADB account using the ADB App to Akua’s National Investment Bank account.
Even though the law framers had the intention to leverage e-levy to generate some revenue for the government it laid a caveat.
Thus, e-levy will not apply to transactions excluded by law.
Here are some e-levy exemptions under Act 1075.
1. Cumulative transfer of GHS 100 per day made by the same person using mobile money
You will be able to send up to GHS100 a day without paying the levy. This will mean that to avoid the levy, you must send GHS100 on five different days for a total transfer of GHS500.
2. Transfer between accounts owned by the same person
If you are sending money to your account, you will not be charged the E-Levy provided your bank or mobile money accounts are linked with your Ghana Card PIN.
The key point here is to make sure all your accounts (Bank Accounts, Mobile Wallets, Investment Accounts, etc.) are linked to your Ghana Card.
For example, You won’t be charged E-levy if:
- Transferring from your MTN wallet to my Vodafone Cash wallet or
- Transferring from a GT bank account to a Fidelity bank account ( all in your name linked to your Ghana Card) or
- Making an internal transfer from your CalBank savings account to your current or
- Transferring from an investment account will not attract the levy because you have linked all your accounts with your Ghana Card.
3. Transfers for the payment of taxes, fees, and charges
Any payment of taxes, fees, or charges made using the Ghana.gov platform or other designated Government of Ghana payment systems will not attract the levy.
It will be funny to be taxed for wanting to pay your taxes.
A recent development is the introduction of e-levy free momo contributions by SSNIT. The Directo General, Dr. John Ofori Tenkorang stated that;
he is “..happy to announce that in about a week from today, members can pay their contributions using Momo and pensioners can also opt to receive their pensions through Momo (E-LEVY exempt), and by the close of the year, the SSNIT app will be fully functional..”
4. Electronic Clearing of Cheques
Clearing of cheques by banks and Specialised Deposit-Taking Institutions such as Savings and Loans companies, etc. will not attract the levy.
5. Specified Merchant Payments
Transfers made through an electronic payment service (mobile money, bank application, FinTech platform (e.g. Korba, expressPay, Hubtel, etc.), etc.) to a commercial establishment that is registered with the Ghana Revenue Authority for Income Tax or Value Added Tax are excluded.
To my tech-savvy colleagues, for you not to be charged for E-levy make sure whatever electronic payment service you are using is registered with GRA. No backdoor apps to transfer money anymore!
If you are charged E-levy for using any electronic payment service in Ghana, that should inform you that your service provided is not tax compliant, and as a good citizen, you need to report them to GRA. Click here to report.
6. Transfers among principal, agent, and master-agent accounts
To avoid charging the Levy multiple times, transfers among principal, agent, and master agent are excluded from the levy.
Does this excite you?
Now that you know the exemptions that exist for E-levy. Let’s answer some specific questions using the knowledge we have discovered above concerning GRA’s website.
Are utility and airtime payments subject to the E-Levy?
No, once the payment is a specialized merchant payment (E.g. Fintech apps like Korba, ExpressPay, Hubtel, Slydepay, etc.) or one made through a government-designated system (ECG, GWCL, Ghana.gov, etc.), the transfer amount will not attract the levy.
Are foreign or inward remittances subject to the levy?
No, remittances are excluded from the levy.
Will Point-Of-Sale (POS) transactions attract the E-Levy?
No, as long as the POS transaction is a payment to a commercial establishment registered with the GRA for income tax or VAT purposes, The Levy will not apply.
Will Cash-In and Cash-Out for Mobile Money attract the E-Levy?
No, both Cash-in and Cash-out are not subject to the E-Levy.
If a private school is paying its teachers and casual workers via mobile money, will the E-Levy apply?
Transfers from the school’s corporate mobile money merchant wallet to teachers and casual workers via mobile money will attract the levy.
However, the school is allowed to claim the levy as an allowable expense in its income statement.
Will mobile money wallet balances attract the E-Levy?
No, mobile money wallet balances will not attract the levy. The levy applies only when there is an electronic transfer from your mobile money wallet.
Will mobile money merchant (agent) account transfers attract the E-Levy?
No. Transfers among principals, master agents, and agents will not attract the E-Levy.
One point worthy to note is that at the time this article was written, the minister of finance, Ken Ofori Atta says it will review Act 1075 since the targetted revenue to be realized has not been met.
We believe the above information has crossed out your doubts on the e-levy exemptions as well as the bracket of transactions allowable under the law that introduced it.
We hope you have learnt the electronic transactions e-levy attracts as well as the various exemptions. Let us know what you think in the comment section below.
You might also want to check out our feature on Fintech in Ghana.