COVID-19 levy, new fuel taxes to take effect from May 1

The new taxes announced in the 2021 budget are set to take effect from May 1, 2021.

These new taxes are as a result of the imposition of an Energy Sector Recovery Levy of GHS 20 pesewas per litre of petrol/diesel and 18 pesewas per kg on Liquefied Petroleum Gas (LPG).

In addition, the imposition of a Sanitation and Pollution Levy of GHS10 pesewas per litre of petrol and diesel respectively will contribute to the new tax.

Also taking effect on May 1 will be the COVID-19 Health Recovery Levy Act, 2021 (Act 1068) and the Energy Sector Levy (Amendment) Act, 2021 (Act 1064).

The COVID-19 Health Recovery Levy Act "imposes a one percent levy on the supply of goods and services made in the country, other than exempt goods or services and the import of goods and services, other than exempt imports".

The levy also applies to the supply of goods subject to the VAT Flat Rate but is not allowable as an input tax deduction.

In a statement signed by the Commissioner-General of the GRA, Rev. Ammishaddai Owusu-Amoah, the Authority said that Parliament has passed the three new tax laws and amended two existing laws to be implemented in 2021.

These laws are the Penalty and Interest Waiver Act, 2021 (Act 1065), COVID-19 Health Recovery Levy Act, 2021 (Act 1068), Financial Sector Recovery Levy Act, 2021 (Act 1067), Energy Sector Levy (Amendment) Act, 2021 (Act 1064) and the Income Tax (Amendment) Act, 2021 (Act 1066).

Recently the Judiciary indicated its plans to establish a tax court to deal with the prosecution of tax-related cases.

The GRA has said it is committed to instituting tougher sanctions against persons who engage in tax fraud and evasion.

In its prosecution policy, it said this will be achieved, not only through tax audits and investigations but also through the prosecution of offenders.

Here are the details of the laws to be implemented:

1. Penalty and Interest Waiver Act 2021 (Act 1065)

• A waiver of penalties and interests on accumulated tax arrears up to December 2020 for persons who make arrangements to pay the principal tax

• The application for the waiver can be done from 1st April to September 2021

• The period of payment of the waiver lasts until 31st December 2021

• The waiver does not apply to payments and returns due from 1st January 2021 under an enactment administered by the Commissioner-General.

2. COVID-19 Health Recovery Levy Act, 2021 (Act 1068)

• This Act imposes a one percent levy on the supply of goods and services made in the country other than exempt goods or services; and import of goods and services other than exempt imports.

• The Levy also applies to the supply of goods subject to the VAT Flat Rate.

• The COVID-19 Health Recovery Levy is not allowable as an input tax deduction.

3. Financial Sector Recovery Levy Act, 2021 (Act 1067)

• This Act imposes a five per cent levy on the profit before tax of banks

• The tax is payable in quarterly instalments. However, for 2021, the levy is payable in three instalments commencing from 30th June 2021.

4. Energy Sector Levy (Amendment) Act, 2021 (Act 1064)

This amendment has added two additional sections, 5A and 5B.

• 5A – The imposition of an Energy Sector Recovery Levy of GH¢20 pesewas per litre of petrol/diesel and 18 pesewas per kg on Liquefied Petroleum Gas (LPG)

• 5B – The imposition of a Sanitation and Pollution Levy of GH¢10 pesewas per litre of petrol and diesel respectively.

5. Income Tax (Amendment) Act, 2021 (Act 1066)

• This Act amends the Sixth schedule to the Income Tax Act 2015 and provides for a 30% rebate of income tax due for the second, third and fourth quarters of 2021 for taxpayers in the following areas – accommodation and food, education, travel and tours, and arts and entertainment sectors.

• A suspension of quarterly income tax instalment payments for the second, third and fourth quarters of 2021 by self-employed persons applying the Income-tax stamp system and owners of taxis and trotros under the Vehicle Income Tax (VIT) system.

• To benefit from these concessions, the person must be registered with the Ghana Revenue Authority, made instalment payment for the first quarter of 2021 and continue to discharge any other obligation specified by an enactment administered by the Commissioner-General.