Govt suspends 15% electricity VAT for stakeholder engagement
The government has announced the suspension of the implementation of the 15 per cent Value Added Tax (VAT) on electricity consumption.
The Ministry of Finance in a statement said the suspension was to allow for further engagements with key stakeholders, including Organised Labour.
“The Ministry expects that these engagements will birth innovative, robust, and inclusive approaches to bridging the existing fiscal gap, while bolstering economic resilience,” the statement said.
The Ministry of Finance had instructed the Electricity Company of Ghana (ECG) and Northern Electricity Distribution Company (NEDCO)) to begin implementing a 15% VAT on power consumption from January 1, 2024.
The tax was to be levied on residential customers who used more electricity than the maximum level allowed for block charges for lifeline units.
According to the Ministry, the directive was in line with Sections 35 and 37, and the First Schedule (9) of the Value Added Tax (VAT) Act, 2013 (Act 870).
However, Orgnised labour and industry associations condemned the decision and demanded that it is scrapped.
Following considerable agitation, the Ministry of Finance announced on January 30 that the government would have “extensive dialogue” with Organised Labour and other key stakeholders in the following weeks to ensure buy-in for the introduction of 15% electricity VAT.
