Government suspends implementation of 15% VAT on electricity

The government through the Ministry of Finance has officially suspended the planned implementation of the 15 percent Value Added Tax (VAT) on domestic consumption of electricity.

In a press statement issued by the ministry on February 7, 2024, the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) have been directed to put a hold on the levy pending further engagements with relevant stakeholders.

The Ministry of Finance explained that the suspension is to allow for extensive dialogue and the buy-in of industry players and labour unions who have expressed dire concerns over the decision to implement the tax measure and its potential effect on consumers and businesses across the country.

“On behalf of the government, the Ministry would like to inform ECG and NEDCO to suspend the implementation of the VAT directive pending further engagements with key stakeholders including organized labour”, parts of the statement read.

From January 1, 2024, the government directed implementing entities [ECG, NEDCo] to begin the imposition of a 15 percent levy on electricity customers above the maximum consumption level specified for block charges on lifeline units.

The move was, however, met with stiff opposition from labour unions, businesses, citizens, lawmakers and the general public.

The tax policy, according to government falls in line with the Medium-Term Revenue Strategy and the IMF-Supported Post-COVID-19 Program for Economic Growth (PC-PEG) which seeks to generate domestic revenue.

MA/SARA

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