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There Will Be No Escaping Ghana’s New Levy on Electronic Transactions

Ghana’s finance minister Ken Ofori-Atta has announced that the government intends to introduce an electronic transaction levy (e-levy) in the 2022 budget. He said this was to “widen the tax net and rope in the informal sector”. The proposed levy, which will come into effect on 1 February 2022, is a charge of 1.75% of the value of electronic transactions. It covers mobile money payments, bank transfers, merchant payments and inward remittances. The originator of the transactions will bear the charge except for inward remittances, which will be borne by the recipient. While the justification for this new levy is to widen the tax net, since the majority of the population make a living in the informal sector, it seems a convenient means to increase government revenue. Initial response to the announcement of the levy has been one of displeasure and fears that it will affect the country’s current digitisation agenda. Research into the use of financial technology in Ghana has shown that in the absence of practical alternatives, mobile money is the only means for many people to access financial services. The research also indicates that the cost associated with mobile money is not an inhibitor. Thus, irrespective of the e-levy, people will still use mobile money.