Gov’t replaces VAT on electricity with ‘new’ tax; targets GHS 1.8 billion in revenue
The imposition of the foreign income tax represents the government’s latest attempt to address the revenue shortfall and maintain fiscal stability, though it remains to be seen how the Ghanaian public will respond to this new taxation strategy.
In a bid to offset the revenue shortfall triggered by the recent abandonment of the Value-Added Tax (VAT) on electricity, the Government is set to implement a tax on the foreign incomes of resident Ghanaians, a move expected to generate approximately GH¢1.8 billion.
Earlier this year, the government’s decision to introduce a VAT on electricity, a measure stipulated in Ghana’s agreement with the International Monetary Fund (IMF), faced strong public opposition and was subsequently abandoned, leading to the significant revenue gap.
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Julie Essiam, the head of the Ghana Revenue Authority (GRA), clarified the scope of the new tax measure, stating, “The alternative is a compliance measure on foreign incomes of resident Ghanaians. Not Ghanaians abroad. We want to make that clear. This is not a measure. It has been in the policy but its implementation has not been optimal.”
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Ms. Essiam further elaborated on the GRA’s strategy, indicating that the authority has instituted robust structural measures to ensure the new tax generates the targeted revenue.
Additionally, the GRA has introduced a voluntary disclosure opportunity for taxpayers. Those who voluntarily declare their foreign income accounts within the next three months will benefit from an interest waiver on their accounts.
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“The implementation has begun because the team is mobilising themselves and drafting the letters to be sent to individual account holders. So by the 2nd of May, those letters might have gone out,” Ms. Essiam stated.
Finance Minister Dr Mohammed Amin Adam echoed the necessity of the new fiscal measures, emphasizing the importance of public support for the government’s efforts to revive the economy.
The imposition of the foreign income tax represents the government’s latest attempt to address the revenue shortfall and maintain fiscal stability, though it remains to be seen how the Ghanaian public will respond to this new taxation strategy.
Source: Norvanreports
Via: Ghananewsonline
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