Ghana’s 2021 Budget Statement, presented on March 12, 2021, featured four new tax levies: to fund excess capacity charges, and a financial sector clean-up tax to cover outstanding liabilities to investors and depositors.
The COVID-19 health levy includes a 1% increase – from 2.5% to 3.5% – in the national health insurance levy which is taxed on goods and services, as well as a 1% increase – from 3% to 4% – in the Flat Rate of Value Added Tax that is imposed on supplies from a wholesaler or retailer of goods. If suppliers choose to pass on the increase, consumers can expect retail prices to increase.
The sanitation and pollution tax is an increase of 10 pesewa on the price per liter of gasoline and diesel while the energy sector recovery tax is an increase of 20 pesewa on the price per liter of gasoline. ‘gasoline and diesel. The combined effect of these two levies will be a 5.7% increase in oil prices at the pump which will translate into higher transport prices for consumers. The Financial Sector Clean-up Levy will impose a 5% levy on banks’ pre-tax profits; this levy will be reviewed by the government in 2024. Banks will therefore have to record this levy and could see their net profits decrease if they absorb it in full.
Along with the four levies, the government intends to rationalize the collection of its revenues. First, the Ghana Revenue Authority will intensify its efforts to prevent tax evasion and under-reporting. In addition, road tolls will be revised to align with current market rates; To this end, the government intends to amend the Fees and Charges (Miscellaneous Provisions) Act 2018 (Act 983) to provide for an automatic annual adjustment of toll tariffs, indexed to the average annual inflation of the ‘last year. A comprehensive gaming policy will also be developed to prevent leaks in the sector due to digitization.
Businesses and consumers are encouraged to be aware of their potentially growing tax obligations as the government steps up its revenue-maximizing business.