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KITE: Electricity VAT must go!

  • SOURCE: | Editor
  • energy-2Although the government of Ghana has scrapped some taxes and reduced others as a way of bringing down the cost of doing business, it is quite surprising that there was not a mention of the removal of the VAT on the non-residential consumers of electricity, Ishmael Edjekumhene, Executive Director of the Kumasi Institute of Technology and Environment (KITE), has said.

    Although he believes that the scrapping of some of the taxes is good, the government could have touched on the VAT on electricity.

    During the reading of the budget statement on Thursday, 2 March, Mr Ken Ofori-Atta, Minister of Finance, mentioned, among other things, the scrapping of excise duty on petroleum products. The government also intends to reduce the special petroleum tax rate on petrol from 17.5% to 15%.

    Other taxes that will be completely abolished include the following:

    1. The 1% special import levy
    2. The 17.5% VAT on financial services
    3. The 17.5% VAT on selected imported medicines not produced locally
    4. The 17.5% VAT on domestic airline tickets
    5. The 5% VAT on real estate sales
    6. Duty on importation of spare parts

    Also, the 17.5% VAT imposed on traders has been replaced with a 3% flat rate, while businesses that employ young graduates from tertiary institutions will get tax credits and other incentives. Furthermore, there will be tax incentives for young entrepreneurs while the Corporate Income Tax will be progressively reduced from 25% to 20% in 2018.

    Additionally, Mr Ofori-Atta said the Akufo-Addo government would initiate steps to remove import duties on raw materials and machinery for production.

    But speaking in an interview with Chief Jerry Forson, host of Ghana Yensom, on Accra100.5FM on Friday, 3 March, Mr Edjekumhene said: “I was quite surprised that the government did not mention anything on the VAT on non-residential consumers of electricity – hair dressers, AGI. Apart from levies, they also pay VAT on the electricity they consume.”

    “I thought that when President Akufo-Addo mentioned the realignment of the tariffs, the VAT on the tariffs would be scrapped, but I haven’t seen that in the budget. That is the only thing surprising in the budget.”


    Source: Ghana/

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