A letter from the Ministry of Finance indicates that the government has been modifying the Value Added Tax (VAT) for a segment of electricity consumers in the country.

The letter, signed by the Minister for Finance, Ken Ofori-Atta, and directed to the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO), specified that the VAT would be applicable to residential customers of electricity exceeding the maximum consumption level outlined for block charges for lifeline units.

It added that VAT is a component of the country's Covid-19 recovery program and should be levied effective from January 1, 2024.

“As part of the implementation of the Government's Medium-Term Revenue Strategy and the IMF-Supported Post Covid-19 Programme for Economic Growth (PC-PEG), the implementation of VAT for residential customers of electricity above the maximum consumption level specified for block charges for lifeline units in line with Section 35 and 37 and the First Schedule (9) of Value Added Tax (VAT) Act, 2013 (ACT 870) has been scheduled for implementation, effective 1st January 2024.

It added, “For the avoidance of doubt, VAT is still exempt for "a supply to a dwelling of electricity up to a maximum consumption level specified for block charges for lifeline units" in line with Section 35 and 37 and the First Schedule (9) of Act 870,” part of the letter which is dated December 12, 2023, reads.

The minister, in the letter, stated that the ECG and NEDCO to put measures in place and collaborate with the Ghana Revenue Authority (GRA) to ensure that the implementation of the VAT starts on January 1.

“The Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) are, hereby, requested to liaise with the Ghana Revenue Authority (GRA) to ensure that the implementation of VAT for residential customers of electricity above the maximum consumption level specified for block charges for lifeline units takes effect on 1st January 2024, in line with Sectio35 and 37 and the First Schedule (9) of Act 870.”