10.04.2024

Ghana: Suspension of VAT on Electricity Tariff

In line with Section 35 and 37 and the First Schedule (9) of Value Added Tax (VAT) Act, 2013 (ACT 870) which implementation has stalled since the passage of the bill in 2013, the Government of Ghana through the Ministry of Finance decided to implement these provisions in Act 870 effective January 1, 2024.

The implementation of this tax policy constituted a crucial element of Ghana’s post-COVID-19 Program for Economic Recovery from the IMF and was set to be implemented in the first quarter of the year.

Following agitations and calls for withdrawal of the policy by most stakeholders, the Ministry of Finance officially announced the withdrawal of the implementation of the 15 per cent Value Added Tax (VAT) on electricity tariffs for residential consumers above maximum consumption level specified for block charges for lifeline units on February,7 2024.

According to the ministry, the suspension is pending further engagements with key stakeholders in hopes of birthing more innovative, robust, and inclusive approaches that will bridge the existing fiscal gap, while bolstering economic resilience.

The International Monetary Fund (IMF) has also indicated its willingness to consider alternative measures to tackle Ghana’s revenue shortfall following the suspension of the Value-Added Tax (VAT) on electricity considering the concerns raised by the public.

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Article published in WTS Africa Quarterly Newsletter #2/2024

Recent tax developments in Africa

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