- The Government of Ghana has agreed to cancel the 15% VAT on a section of electricity consumers.
- The decision was made at a cabinet meeting held on February 2, 2024.
- The VAT was initially implemented as part of measures to raise government revenue under the IMF bailout program.
- The government will now engage in dialogue with the IMF to find a solution for the revenue shortfall caused by the cancellation of the VAT on electricity.
- The government plans to reduce expenditure to compensate for the revenue shortfall.
- The final decision on completely cancelling or significantly reducing the VAT on electricity will be reached after discussions with the IMF.
- The implementation of the VAT on electricity has caused public outrage, with organized labor threatening to go on strike if the tax is not scrapped.
- The leaked letter from the Ministry of Finance stated that the VAT would be charged for residential customers above a specified consumption level, starting from January 1, 2024.
- The VAT implementation is part of the government’s Medium-Term Revenue Strategy and the IMF-supported Post Covid-19 Programme for Economic Growth.
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.