April 13, 2021
Ghana enacts various tax amendments introduced in 2021 Budget
Ghana’s Parliament has passed the following tax laws and amendments:
These enactments were passed as part of the various tax measures introduced by the Government in the 2021 Budget Statement and Economic Policy (the 2021 Budget).
This Alert summarizes key aspects of the newly passed tax laws and the Amended Acts.
The Parliament of Ghana has enacted these Acts in line with the various measures introduced by the Government in the 2021 Budget to rebuild Ghana’s public finances. These enactments received gazette notification on 31 March 2021. Since no specific dates are stated in the enactments at the date of entry into force, the gazette notification date constitutes the date of entry into force of these enactments.
COVID-19 Health Recovery Levy Act, 2021, Act 1068
The Act imposes a special levy, the COVID-19 Health Recovery Levy (the Levy), on the supply of goods and services and imports to raise revenue to support COVID-19 expenditures and provides for related matters.
The imposition of the Levy is on the supply of goods or services made in the country, and on the import of goods or services, unless exempt. The rate of the Levy is 1% and it is calculated on the value of the taxable supply of goods or services or on the value of imports. The time of supply is the same as provided in the Value Added Tax (VAT) Act, 2013, Act 870 (as amended). A person who charges the VAT flat rate is also required to charge the Levy on the supply of goods or services.
Supplies considered as exempt under the First Schedule of the VAT Act are also exempt from the Levy. Similarly, supplies considered as zero-rated under the Second Schedule of the VAT Act are zero-rated for the purpose of this Levy. Individuals and organizations specified in the Third Schedule of the VAT Act are relieved from the payment of the Levy. Similarly, supplies specified in the Third Schedule of the VAT Act as relief supplies do not attract the Levy.
A person who incurs the Levy is not entitled to an input tax deduction. The Commissioner-General (CG) of the Ghana Revenue Authority (GRA) is responsible for the collection of the Levy, and the administration of the Levy is governed by the Revenue Administration Act, 2016, Act 915 (as amended).
Penalty and Interest Waiver Act, 2021, Act 1065
The Act grants a waiver of penalties and interest on accumulated tax arrears through December 2020 for persons who make arrangements with the GRA for payment of the principal tax by December 2021 and provides for related matters.
The Act provides that the CG of the GRA shall not recover assessed penalties and interest on the tax arrears paid in respect of the relevant period, where a person on or before 31 December 2021:
The relevant period refers to the period where there are tax arrears or outstanding returns to be filed up to 31 December 2020. A person granted the waiver is not liable to prosecution or any other enforcement action with respect to the tax due for the relevant period.
Conditions for the waiver of penalty and interest
To qualify for a waiver of penalty and interest, a person must, on or before 30 September 2021:
Scope of waiver
The waiver of penalties and interests covers a person who:
However, the waiver will not apply to a person who fails to comply with the provisions of an enactment administered by the CG, and to payments and returns due from 1 January 2021 under enactments administered by the CG.
Application for waiver
A person who qualifies for the waiver is required, during the period commencing from 1 April 2021 and ending on 30 September 2021, to submit to the CG at the address specified by him:
The CG is required to:
An applicant dissatisfied with a decision of the CG may file a written complaint with the CG for the determination of the matter within 30 days after receipt of the decision. The CG must make the determination and notify the applicant within 30 days after receipt of the complaint. A person who is dissatisfied with the CG’s determination may pursue the matter in court.
The CG may grant terms for the payment of an assessed amount and filing of the outstanding tax returns. The Act does not derogate from the powers of the CG to remit tax under an enactment administered by the CG. The Act empowers the CG to issue administrative guidelines as may be required for the effective and efficient implementation of the Act. The Minister responsible for Finance is also empowered by the Act to issue regulations for the effective and efficient implementation of the Act.
Income Tax (Amendment) Act, 2021, Act 1066
The Act amends the Sixth Schedule to the Income Tax Act, 2015, Act 896 to provide for a rebate for selected industrial sectors, suspend quarterly installment payments by specified self-employed persons and owners of commercial vehicles and for related matters.
The Act provides that the rate of income tax payable on the estimated chargeable income of the sectors listed below for the second, third and fourth quarters of 2021 shall be 70% of the applicable rate:
Additionally, the quarterly income tax installment payment for the following categories of persons are suspended for the second, third and fourth quarters of 2021:
(a) The following self-employed persons listed in the Third Schedule to the Income Tax Regulations, 2016, L.I. 2244:
(b) An owner of any of the following class of vehicles provided in the Second Schedule to the Income Tax Regulations, 2016, L.I. 2244
Conditions for benefit of rebate and suspension of quarterly income tax instalment payments
A person may benefit from the rebate and/or concessions listed above where the person:
Energy Sector Levies (Amendment) Act, 2021, Act 1064
The Act amends the Energy Sector Levies Act, 2015, Act 899 to provide for an Energy Sector Recovery Levy and Sanitation and Pollution Levy to be imposed on specified petroleum products and for related matters.
The Act imposes an Energy Sector Recovery Levy (the ESR Levy) and empowers the Minister for Finance to open and maintain the Energy Sector Recovery Account for the purpose of receiving moneys realized from the ESR. Moneys in the Energy Sector Recovery Account shall be used to support the payment of:
Also, the Act imposes a Sanitation and Pollution Levy (the SPL) on specified petroleum products and empowers the Minister for Finance to open and maintain the Sanitation and Pollution Account for the purpose of receiving moneys realized from the Sanitation and Pollution Levy. Moneys in the Sanitation and Pollution Account shall be used to:
The Minister for Finance is mandated to submit an annual report on the management of the accounts. The Act amends the First Schedule of Act 899 on the imposition and collection of levies as follows:
Ghana Infrastructure Investment Fund (Amendment) Act, 2021, Act 1063
The Act amends the Ghana Infrastructure Investment Fund Act, 2014, Act 877 to provide for additional sources of funds, extend the period of exemption for taxes and for related matters.
Sources of money for the Fund
The sources of the money for the Fund are:
The Fund is exempt from the payment of any form of tax for the first 15 years of its operation. The Act repeals section 9 of the Earmarked Funds Capping and Realignment Act, 2017, Act 947.
Ghana National Card PIN as Tax Identification Number (TIN) of individuals
With effect from 1 April 2021, the Ghana National Card PIN has replaced the TIN of individuals. This was contained in a circular issued jointly by the National Identification Authority, the GRA and the Registrar General’s Department on 31 March 2021.2 This directive follows the President’s presentation of the 2021 State of the Nation Address (2021 SONA) to Parliament where he indicated that the National Identification Number (Ghana Card PIN) would become TIN and Social Security and National Insurance Trust (SSNIT) numbers.
According to the circular, there will be a transition period from 1 April 2021 to 31 December 2021. During this period, the Ghana Card PIN and TIN will be used simultaneously. Subsequently, the TIN will be phased out and the Ghana Card PIN will be used as the unique number for tax identification purposes. A self-service portal is available on the GRA website (www.gra.gov.gh) where persons can link their Ghana Card PIN to their TIN.
For additional information with respect to this alert, please contact the following:
Ernst & Young Advisory Services Limited, Accra
Ernst & Young Société d’Avocats, Pan African Tax – Transfer Pricing Desk, Paris
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
Ernst & Young LLP (United States), Pan African Tax Desk, New York