COVID-19 Health Recovery Levy Act, 2021 (Act 1068)
As part of the Government of Ghana’s fiscal measures aimed at raising revenue to support Covid-19 related expenditures, this new legislation imposes a special levy on the domestic supply of goods and services as well as imports. The 1% levy is chargeable under both the VAT standard and flat rate schemes. The Covid-19 Health Recovery Levy is calculated on the value of the taxable supply of the goods or service or on the value of imports. Persons who incur the levy are not allowed input tax deductions on purchases but are allowed deductions against taxable profits.
Effective 1 May 2021, registered persons for VAT are required to collect and account for the new levy.
Penalty and Interest Waiver Act, 2021 (Act 1065)
In light of the adverse economic impact that the pandemic has had on the economy, the Penalty and Interest Waiver legislation was enacted by the Parliament of Ghana. The intention of the Act is to give some relief to taxpayers and encourage the early settlement of accumulated tax arrears. The waiver applies to registered and non-registered persons who are in arrears for the submission of returns and/or the payment of taxes up to 31 December 2020 provided the following conditions are met. A person must:
- submit returns and makes a full disclosure of undisclosed liabilities for periods up to 31 December 2020 on or before 30 September 2021.
- pay or makes arrangement with the GRA to pay outstanding and assessed taxes by 30 September 2021.
Applications for the waiver must be made to Commissioner-General (CG) by 30 September 2021. The CG shall communicate his/her decision on the application within thirty (30) days of receipt. Under the provisions of the Penalty and Interest Waiver Act, persons dissatisfied with the CG’s decision are allowed to lodge a complaint with the CG. They may also proceed to court if the outcome of the complaint is deemed unsatisfactory.
Financial Sector Recovery Levy Act, 2021(Act 1067)
As a result of the financial sector clean-up carried out in recent years and it's associated cost to the Government, the 2021 Budget Statement and Economic Policy proposed the introduction of a levy to help cover the cost of the reforms and meet any outstanding commitment in the financial sector. The levy is chargeable on Profit Before Tax (PBT) of Banks other than rural or community banks at a rate of 5%.
Banks are required to submit an estimate of the levy together with the annual income tax estimate for a Year of Assessment (YoA). Payment of the levy is to be made on a quarterly basis. For the 2021 Year of Assessment, the levy is payable in three (3) instalments (i.e. 30 June 2021, 30 September 2021 and 31 December 2021). No deduction is allowed in respect of this levy for income tax purposes. Expiration date for the levy is after the 2024 Year of Assessment subject to review of the Minister of Finance.
Income Tax (Amendment) Act, 2021 (Act 1066)
Effective 1 April 2021, the Government of Ghana through this amendment is initiating tax relief measures for taxpayers to help mitigate the devastating consequences COVID-19 has had on the public. This amendment is made to the Sixth Schedule of the Income Tax Act, 2015 (Act 896) as amended (ITA). Among the measures effected under the new provision are the following:
- A tax rebate of 30% on the income tax liability of persons operating in specified sectors of the economy. These sectors are education, travel and tours, arts and entertainments and accommodation and food. These rebates are to cover the second through to the fourth quarter of 2021.
- The suspension of quarterly income tax instalment for the second, third and fourth quarters of 2021. This provision is applicable to specified categories of self-employed persons as listed in the Income Tax Regulation, 2016, (L.I 2244). These includes;
i. Category A (Retail traders, bakeries, estates and accommodation agents, etc).
ii. Category B (Dressmakers, hairdressers, beauticians, artisans, etc)
iii. Category C (Auto technicians, corn and other millers, butchers, vulcanisers, etc) and;
- The suspension of quarterly instalment payments of Vehicle Income Tax (VIT) for primary commercial transport owners (i.e. taxis and trotros) for the second, third and fourth quarters of 2021.
The enjoyment of the above relief is contingent on the taxpayer being registered with the Ghana Revenue Authority and fulfilling their obligation for the first quarter of 2021.
Energy Sector Levies (Amendment) Act, 2021 (Act 1064)
The Energy Sector Recovery Levy has been reviewed upwards to 20 pesewas per litre on petrol and diesel to fund the payment of energy sector bills and excess capacity charges under existing Power Purchase Agreements (PPAs).
The amendment further introduces a 10 pesewas per litre levy on petrol and diesel products. This move forms part of the government’s efforts aimed at addressing the sanitation and pollution challenges in Ghana. It is expected that these changes will cause a marginal increase in the price of petroleum and diesel products for taxpayers.