June 24, 2024
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Govt to tax foreign incomes of resident Ghanaians to replace VAT on electricity

The Government is seeking to plug the revenue gap created as a result of the abandoned VAT on electricity with a tax on the foreign incomes of resident Ghanaians.

At the beginning of the year, the government introduced a value-added tax on electricity, however, it was forced to abandon the initiative following a public backlash.

This created a revenue gap of about GHc 1.8 billion.

The government had planned to implement the VAT on electricity as part of revenue measures in the IMF deal but the initiative was abandoned after public resistance, leading to a revenue shortfall.

The government is confident that ensuring compliance with the tax on foreign incomes will close the revenue gap.

Ghana’s deal with the IMF entails certain expenditure rationalization and revenue measures to ensure fiscal consolidation of the economy.

To make up for this shortfall, the government says it will ensure compliance with the tax on foreign incomes of Ghanaians who reside in the country for 183 days or more.

“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. We are happy to announce that we have put strong and structural measures in place to ensure that this yields the revenue of GHS 1.8 billion and beyond,” Julie Essiam, the head of the Ghana Revenue Authority said.

The GRA boss also encouraged taxpayers to take advantage of the window created to get the interest on their accounts waived.

She added “Its implementation has begun because the team is mobilizing themselves and drafting the letters to be sent to individual account holders. So by the 2nd of May, those letters might have gone out. If individuals come forward within three months and say that, this is the amount in this account, the interest on the account will be waived and that is the voluntary disclosure aspect of this measure”.

Meanwhile, Finance Minister, Dr. Mohammed Amin Adam wants Ghanaians to bear with the government as new measures are introduced to restore the economy.

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