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A 1.75 percent fee has been imposed on MoMo and other electronic transactions.

A 1.75 percent fee has been imposed on MoMo and other electronic transactions.

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The government has established an Electronic Transaction Levy as part of its efforts to broaden the country’s revenue base. All electronic transactions will be subject to a 1.75 percent fee.

According to Finance Minister Ken Ofori-Atta, the purpose of this tax is to increase financial inclusion and safeguard the underprivileged. The fee will be placed on mobile money payments, bank transfers, merchant payments, and inbound remittances and will be borne by the sender.

“Following extensive debate, the government has decided to collect a levy on all electronic transactions in order to broaden the tax net and bring in the informal sector.” This will be termed as the “Electronic Transaction Levy or E-Levy,” Ken Ofori-Atta stated during the introduction of the 2020 Budget in parliament on Wednesday.

The fee, however, will be eliminated for transactions totaling GHS 100 or less in a single day, or around GHS 3,000 per month.

According to the government, a portion of the levy proceeds would be utilized to assist entrepreneurship, youth employment, cybersecurity, digital, and road infrastructure, among other things. If the appropriation is passed, the government anticipates that the new policy will go into effect on January 1, 2022.

“The government will engage with all industry partners to ensure that their systems and payment platforms are adjusted to follow the regulation,” continued the Finance Minister.

He stated that the total value of transactions for 2020 was anticipated to be more than GHS 500 billion, up from GH78 billion in 2016, and that total mobile money subscribers and active mobile money users grew at an average rate of 18 percent and 16 percent, respectively, between 2016 and 2019.

As a result of this, the government believes there is a “enormous potential to enhance tax collections by bringing into the tax bracket transactions that may best be characterized as being performed in the “informal economy.”

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