Don't panic, 15% VAT on electricity not being charged

The Electricity Company of Ghana (ECG), has clarified that the new Value Added Tax (VAT) on electricity consumers beyond the lifeline threshold is not being charged yet.

The ECG and the Northern Electricity Distribution Company (NEDCO) on January 1, were directed by the Finance Ministry to implement the 15 percent tax from January 2024.

The Trades Union Congress (TUC) on Tuesday, gave the government a seven-day ultimatum to withdraw the imposition of the VAT on electricity consumption above lifeline.

Secretary General Dr. Yaw Baah at a press conference vehemently opposed the move, citing its detrimental impact on the livelihoods of ordinary Ghanaians, particularly pensioners and low-income earners.

But speaking on the Citi Breakfast Show on Thursday, January 25, the Managing Director of ECG, Mr. Dubik Mahama acknowledged that there are legal and operational challenges associated with the implementation of the new tax.

He added that his outfit is still in discussion with the Public Utilities Regulatory Commission (PURC) over the implementation of the VAT.

“It is on record, we have not implemented it, and we are not charging it,” Mr Dubik Mahama said, adding, “There are some difficulties that have to be checked with the law so I don’t think that it is time for people to panic, it is not panic mode yet. All of these things have to be cleared out…so the collection has not started, it is still a conversation going on.”

“If a letter doesn’t belong to you and you take and read it, you will attempt to see it in a certain light but those of us whom the letter was meant for our consumption, we understood the letter and we have applied it accordingly, so I can say on authority that it hasn’t been charged, it is a conversation being had, it might even reach a point where the whole law will be looked at and recrafted.”