At a town hall meeting in Koforidua on Thursday, January 27, 2022, Communications Minister Ursula Owusu-Ekuful said Ghana’s electronic transactions level (e-levy) was lower than the rates of digital taxes in other jurisdictions, particularly the United Kingdom.
The proposed introduction of the e-levy has been greeted with opposition since the government presented its 2022 Budget statement to parliament last year.
Fact-Check Ghana has verified the claims and provided the key facts on the issue below.
Claim 1: “E-levy is being introduced at the lowest rate for any tax in Ghana, comparatively at 1.75%. Less than 2%.”
Verdict: Completely False
Explanation: Ghana has introduced a lot of taxes in recent times to shore up its budget deficit.
In 2021, for example, the government introduced the COVID-19 Health Recovery Levy Act, 2021 (Act 1068). The Health Recovery Levy Act imposed a 1% levy on the supply of goods and services made in the country, and goods and services imported unless exempted.
Aside from that, the John Mahama NDC government also imposed a 1% Special Import Levy on imported goods.
This tax is paid at the point of importation and computed on the Cost, Insurance and Freight (CIF) value of the goods.
It is therefore not true that E-levy is being introduced at the lowest rate for any tax in Ghana.
Claim 2: ”In other countries, digital taxes are being introduced at the rate of up to 10% and they’re paying. That’s the UK. And we go there and seek loans from them to finance our development. When we are not paying the requisite taxes that we should.”
Verdict: Completely False
Explanation: The government of the United Kingdom introduced a 2% digital services tax in April 2020, not 10%.
Unlike Ghana’s E-Levy tax, the UK digital service tax is not targeted at individuals or citizen’s personal electronic transactions. The tax is expected to raise revenues from large multi-national enterprises with revenue derived from the provision of social media services, search engines or online marketplace to UK users.
What does the Digital Services Tax cover in the UK?
The UK government said the Digital Services Tax would apply to a group’s businesses that provide a social media service, search engine or an online marketplace to UK users. These businesses would be liable to the Digital Services Tax when their worldwide revenues from these digital activities are more than £500 million and more than £25 million of these revenues are derived from UK users.
The government also said there was an allowance of £25 million, which means a company’s first £25 million of revenues derived from UK users will not be subject to Digital Services Tax.
Ursula Owusu’s claim is, therefore, both false and misleading. The two taxes are not the same.
While Ghana’s e-levy will have an impact on both individuals and businesses, the UK’s does not have any direct impact on individuals, but businesses only, according to the policy paper published on the UK government’s website on March 1, 2020.
This tax will, however, be short-lived because nearly 140 countries have struck a deal on new rules for international corporate taxation in October 2021.
A global tax reform, which is expected to take effect in 2023, will thereby replace the tax, according to US newswire services, Reuters.
It is therefore Completely False that the UK is implementing up to 10% digital services tax.
