The Ministry of Finance has imposed a new Value Added Tax (VAT) on electricity consumption above certain lifeline levels for residential customers, effective January 1, 2024, to increase revenue and comply with the Government’s Medium-Term Revenue Strategy and the IMF-Supported Post Covid-19 Programme for Economic Growth (PC-PEG).
The VAT will be applied to households exceeding the maximum consumption level specified for block charges for lifeline units, as outlined in Sections 35 and 37 and the First Schedule (9) of the Value Added Tax (VAT) Act, 2013 (ACT 870). However, the VAT remains exempt for electricity supplied to dwellings up to the specified lifeline consumption level.
The directive, communicated through a press statement, urges the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to collaborate with the Ghana Revenue Authority (GRA) to ensure the effective implementation of the VAT on residential customers exceeding the specified lifeline consumption level.
Furthermore, the GRA has been instructed to coordinate with ECG and NEDCO for the transfer of revenues collected from the VAT implementation as part of domestic VAT collections.
While the Ministry of Finance emphasizes the necessity of the VAT for economic growth and sustainability, Ghanaians have expressed discontent, particularly in light of the recent power outages experienced across the country over the past week. Citizens are questioning the timing of the tax implementation, given the ongoing challenges with the electricity supply.
The public outcry underscores concerns about the potential impact of the new tax on households that exceed average power consumption, with citizens demanding transparency and accountability in the allocation of collected revenues.
See press statement below:
