The Ministry of Finance has announced that the government has imposed a Value Added Tax (VAT) on a specific section of electricity consumers in the country.
The letter, addressed to the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO), was signed by the Minister for Finance, Ken Ofori-Atta.
The letter states that the VAT will apply to residential electricity customers above the maximum consumption level specified for block charges for lifeline units. This move is part of the government’s Covid-19 recovery program and took effect from January 1, 2024.
According to the letter, the implementation of VAT for residential customers of electricity is in line with Section 35 and 37 and the First Schedule (9) of the Value Added Tax (VAT) Act, 2013 (ACT 870). The government aims to generate revenue through this initiative and support the country’s Medium-Term Revenue Strategy and the IMF-Supported Post-COVID-19 Program for Economic Growth (PC-PEG).
However, it is important to note that VAT will remain exempt for “a supply to a dwelling of electricity up to a maximum consumption level specified for block charges for lifeline units,” as mentioned in Sections 35 and 37 and the First Schedule (9) of Act 870.
In the letter, Minister Ofori-Atta requested that ECG and NEDCO collaborate with the Ghana Revenue Authority (GRA) to ensure the effective implementation of VAT from January 1, 2024. The companies are expected to put necessary measures in place to facilitate the collection of VAT from residential customers above the maximum consumption level.
Find a copy of the letter attached