The government of Ghana presented the 2022 Budget Statement on 17th November 2021 with the theme “Building a Sustainable Entrepreneurial Nation: Fiscal Consolidation and Job Creation”. The budget statement in summary outlines government’s plan to sustain the recovery efforts from the socio-economic impact of the pandemic and get Ghana quickly back to pre-pandemic growth trajectory and a sustainable debt path. It also outlines the strategies to address one of the major problems of our time, which is youth unemployment
BUDGETED REVENUE AND EXPENDITURE
On the projected expenditure side, the main highlights are
1. Total Expenditure is GH¢137,529 million (27.4% of GDP), 23.2% above 2021
a) Compensation of Employees is projected at GH¢35,841 million (7.1% of GDP) and constitute 26.1% of the Total Expenditure.
a) Interest Payment are projected at GH¢37,447 million (7.5% of GDP)
b) Capex- GH¢16,396 million (3.3% of GDP)
On the Revenue side, the main highlights are:
a) Total Revenue and Grants GH¢100,517 million (20.0 percent of GDP)
b) Domestic Revenue is estimated at GH¢99,547 million, growth of 44% over 2021
a) Non-Oil Tax Revenue is GH¢77,136 million (15.4 percent of GDP, and 46.2% from the 2021.
TAX NEW TAX MEASURES
1. Electronic Transaction Levy (E-Levy).: The budget statement indicated that the number of registered mobile money accounts grew by 12.7% globally to 1.21 billion accounts in 2020 – double the forecasted growth rate, whiles the value of transactions between mobile money platforms and banks grew fourfold, reaching US$68 billion in 2020, up from just US$15 billion in 2015. Following this observation, there exists significant potential to increase tax revenues by bringing into the tax bracket, transactions that could be best defined as being undertaken in the “shadow economy. Government has decided to place a levy on all electronic transactions to widen the tax net and rope in the informal sector.
a) Scope: the levy will cover Electronic transactions relating to mobile money payments, bank transfers, merchant payments, and inward remittances
b) Rate: The rate is 1.75% which shall be borne by the sender, except inward remittances
which will be borne by the recipient.
c) Exemptions: To safeguard efforts being made to enhance financial inclusion and protect the vulnerable, all transactions that add up to GH¢100 or less per day (which is approximately GH¢3000 per month) will be exempt from this levy.
d) Uses of funds: A portion of the proceeds from the E-Levy will be used to support entrepreneurship, youth employment, cyber security, digital and road infrastructure, among others.
e) Effective date: This new policy comes into effect from 1st February 2022.
f) System Changes requirement: Government calls on all industry partners to ensure that their systems and payment platforms are configured to implement the policy by 1st February 2022.
2. Compliance and Revenue Assurance: The Ghana Revenue Authority supported by Revenue Assurance and Compliance Enforcement (RACE) will continue with its enhanced compliance measures to expand coverage and plug revenue leakages.
3. The Modified Taxation System: The Modified Taxation System which was introduced in 2015 through the Income Tax Act, 2015 (Act 896) will be implemented in 2022 to provide a simplified system of tax compliance for the informal sector and small scale individuals in business. This will cover businesses with the threshold of GH¢ 500,000 per annum.
4. Import Benchmark Review: The temporal benchmark (discount) policy on imports introduced in April 2019 will be reviewed in 2022.
5. Revision to the Flat Rate VAT Scheme: The VAT Flat Rate of 3 percent of the sale price of goods will be reviewed to and will be limited to only retailers of goods. All wholesalers who used to be under the flat rate will be required to charge a standard rate of 12.5% on the supply of goods
6. Review of Property Rates: Government, through the Ghana Revenue Authority will from January 2022, assist the MMDAs to implement a common platform for property rate administration to enhance Property rate collections and its accountability
7. Review of Fees and Charges: Government will review fees and charges of MDAs for implementation from 1st January 2022.
8. Removal of Road Toll: Government will remove tolls on all public roads and bridges. This takes effect immediately the Budget is approved.
9. Relief to small-scale Gold Miners: Government in consultation with the stakeholders in the industry has decided to reduce the withholding tax rate for sale of unprocessed gold by small scale miners on whom the incidence of the tax falls from 3 percent to 1.5 percent
10. Tax Exemptions: The Exemptions Bill has been completed and laid before Parliament. It will be passed and implementation in 2022