About 20.7% of Ghanaians are exploiting loopholes in the implementation of the Electronic Transaction Levy also known as e-levy, to avoid being taxed, a study reveals.
A study conducted by the IMANI Digital Financial Services Research Project team shows that less than a quarter of the population collaborate with mobile money vendors or merchants when engaging in transactions beyond GH100.
A 1.5% levy is currently applied on the value of transfers above the tax base on a daily basis.
But mobile money merchants or vendors are an exception under the current system and because of this, Ghanaians who are not in support of the levy, decide to use these merchants to send or withdraw money above GHc100.
On the matter, a member of the E-Levy Technical Committee, Patrick Frimpong Danso, earlier remarked that it is illegal for MoMo vendors to transfer money on an individual’s behalf to a different account.
“It is illegal. You can’t go to a vendor and say take GH¢200 and send it to someone for me. No. This thing has been happening for a long time but many don’t know it is illegal,” he told the media.
MoMo vendors are not the only avenue Ghanaians are using in order not to be taxed.
Per the report, 43.8% of Ghanaians have decided to evade the cashless economy agenda and carry cash around. Going back to the cash economy, they are not expected to pay any levy.
Also, 18.1% of Ghanaians are using mainstream banks, so they avoid paying the levy.
Highlights of the report further reveal that 83% of Ghanaians have reassessed their electronic financial dealings following the E-levy implementation on May 1, 2022.
“Of this number, about 47% indicated that they had reduced the number of mobile money transactions by about 51% to 100%.
“Another 25% indicated that they had reduced their transactions by about 10% to 50%. Only about 1.6% of respondents indicated that their transaction volumes have stayed or increased their volume.”
Before the levy’s implementation, a study carried out by IMANI revealed that 46.5% of Ghanaians preferred to use digital financial services such as mobile money service over mainstream banking due to convenience, (27.5%) for security reasons and (24.8%) due to transfer costs (which is no more than GHc10 regardless of the amount being transferred).
But in its latest study, after the implementation of the levy, Ghanaians who chose digital financial service due to convenience had declined.
Currently, 44.19% of Ghanaians use digital financial services due to convenience. About 10.08% of Ghanaians due to security now use digital financial service. Those who use digital financial service due to transfer costs rose to 36.73 per cent.
It is clear that per the report, those who chose convenience and security for using digital financial service are perturbed by the implementation of the levy.
Those who use digital financial service due to transfer costs however seem not to be worried. It is unknown if there is a correlation between such people and those who exploit loopholes to evade paying the levy, therefore, the rise in the figure.
E-levy and its brouhaha
On March 29, a Majority-sided Parliament approved the Electronic Transactions (E-Levy) Bill after amending its earlier 1.75% rate. The Bill was considered under a certificate of urgency.
President Akufo-Addo on March 31, signed the E-levy Bill into law and a day after, it was implemented by the Ghana Revenue Authority.
Following its implementation, subscribers earlier criticised the government for the system’s failure to identify and exempt transactions below GH¢100 as stipulated in the Act.
The GRA called on citizens to remain calm as it worked to refund monies wrongfully taken. Over 120,000 customers have so far been reimbursed for wrongful deductions, the Authority has revealed.
On the other hand, the Minority who staged a walkout during the levy’s approval in Parliament have dragged the Attorney-General to the Supreme Court.
They argued that Parliament did not have the required number of at least half of its members present, when the tax policy was approved.
Minority Leader of Parliament, Haruna Iddrisu, and his colleagues Mahama Ayariga and Samuel Okudzeto Ablakwa who sought an injunction against the implementation of the levy had their application dismissed by the Supreme Court in a unanimous decision.
However, the apex court directed the Ghana Revenue Authority to preserve the records generated since the levy’s implementation to enable refund should the plaintiff win the case.
Source: The Independent Ghana