The Ghana Revenue Authority (GRA), has directed all electricity and power-producing companies to apply the GETFund Levy of 2.5%, NHIL 2.5% and VAT rate of 12.5% on the value of the energy they supply the Electricity Company of Ghana (ECG).
According to the GRA, it has sighted a notice dated March 13, 2001, which waives VAT on electricity supplied to the ECG.
The GRA said the agreement is contrary to the Value Added Tax, 2013 (Act 870) which does not list supply of energy and capacity charge as one of the items that should be zero-rated.
“It has come to our notice that some electricity producing and power supplying companies do charge VAT, GETfund and NHL, at zero rate to the Electricity Company of Ghana Limited contrary to the Value Added Tax Act, 2013 (Act 870).”
“We wish to state that Section 36 of the Act which provides for zero rating of supply refers to the Second Schedule of the Act. However, the Second Schedule of the Act did not list supply of energy and capacity charge as one of the items that should be zero rated,” GRA said in a statement signed by its Acting Commissioner-General, Ammishadai Owusu-Amoah.
The standard VAT rate is 12.5 percent calculated on the value of the taxable supply of goods or services or the value of an import.
However, the zero-rated items include goods and services sold by companies who are free from the Goods and Services Tax.
“We hereby direct that all electricity and power producing companies are required to apply the GETFund levy of 2.5% and NHIL 2.5% after that VAT is a standard rate of 12.5% on the value of the supplies, the GRA statement directed.