Transfers to self on interoperability platform will not attract E-Levy – Finance Minister

Ken Ofori-Atta, Finance Minister

Finance Minister Ken Ofori-Atta has said that money transfers from one’s wallet to his own bank account and vice versa on the mobile money interoperability platform will not attract the 1.75 per cent electronic transaction levy (E-Levy).

He was speaking on Good Evening Ghana on Metro TV.

The Minister explained that the linkage of all bank accounts and SIM cards to Ghana Card will make it easy for the system to tell that both the bank account and the digital wallet belongs to the same person, so, the E-Levy will not be applied.

He also stated that unlike the way telcos apply their zero-rated transfer on up to GHS100 daily, with the E-Levy, even if a person send more a GHS100 at a go, they will still enjoy the tax waiver on GHS100 and the tax will apply to only the balance.

The telcos insist that to enjoy the fee waiver on the GHS100 per day, one would need to send either exactly GHS100 or less at a go. But if one sends GHS150, for instance, the full charge of GHS1.50 will be applied.

But with the E-Levy, the Minister said if one sends GHS150, the tax will only apply to GHS50 and the GHS100 will be exempted.

The Minister announced the 1.75 percent E-Levy in his 2022 Budget in Parliament, and it has since been met with huge public outcry over the government’s penchant for piling taxes on Ghanaians, particularly after they made campaign promises to convert the economy from a tax-based one to a production-based one.

Indeed the Vice President, who is Chair of the Economic Management Team and the champion of the country’s digital transformation, said in August last year that he did not believe mobile money, the biggest electronic transaction service, should be taxed.

He explained that that most of the people who use mobile for transactions are poor people and government was on a mission to rope them into the financial sector, so placing taxes on them, in addition to the service charges the pay to telcos will defeat the whole financial inclusion agenda.

But one year on, and the government has slapped a tax even higher than the mobile money service charge on electronic transactions.

The Covid-1 Irony

This comes at the time when, because of Covid-19, mobile money operators have waved charges on the first GHS100 sent in a day and Vodafone Cash in particular has completely zero-rated all transfers of any amount on both its network and even across networks.

Indeed, because of Covid, several of the Fintechs have also reduced their service charges to the barest minimum – way below the usual one percent – and they depend on the usage volumes to compensate for that.

The irony is that the Minister actually cited the exponential growth in digital financial transactions due to Covid-19 as government’s reason in chief for introducing the E-Levy. So whereas industry players are making sacrifices for customers due to Covid, government has seen prudence in increasing the tax burden to do same.

TechGh24 can confirm that the Fintech community are gearing up to challenge the E-Levy because they think it threatens to derail the gains made in the journey towards financial inclusion and cash-lite society.

Ken Ofori-Atta, however, noted that the resistance to the E-Levy, like any other tax, was expected because “no one likes paying taxes”, but government has weighed the options thoroughly and is convinced that the way to widen the tax net and rope in the informal sector is to introduce the E-Levy because a greater chunk of the informal sector business take place digitally.

Meanwhile, government is yet to meet with industry players to discuss the details of the tax, and how it should be calculated and implemented beginning January 2022.


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