Executive summary

The Parliament of Ghana has enacted the Income Tax (Amendment) Act, 2025 (Act 1129) (the ITA Amendment), which has introduced some key modifications to Ghana's withholding tax framework. These amendments, which took effect upon the presidential assent and subsequent Gazette notification on 2 April 2025, eliminates withholding tax obligations on lottery winnings and unprocessed gold transactions.

Further, the Electronic Transfer Levy (Repeal) Act, 2025 (Act 1128) (the E-Levy Repeal Act) has repealed the Electronic Transfer Levy Act, 2022 (Act 1075) (as amended). Therefore, the electronic transfer levy (E-levy) imposed on electronic financial transactions has been abolished. To ensure the smooth implementation of the E-Levy Repeal Act, the Commissioner-General (CG) of the Ghana Revenue Authority (GRA) has issued guidelines to which all charging entities must adhere.

These Acts were enacted as part of the various tax measures proposed by the Government in the 2025 Budget Statement (the 2025 Budget). For background on the 2025 Budget, see EY Global Tax Alert, Ghana's finance minister presents 2025 budget statement and economic policy for FY2025 with tax implications, dated 14 March 2025.

Detailed discussion

Removal of withholding tax on lottery winnings

The Income Tax (Amendment) Act, 2025 (Act 1129) abolishes the 10% withholding tax previously applied to gross winnings from lotteries by implementing the following amendments to the Income Tax Act, 2015, Act 896 (as amended) (referred to as the "principal enactment"):

1. Deletion of subparagraph (vii) (winnings from lottery) from Section 6(2)(a) of the principal enactment to exclude lottery winnings as a form of investment income
2. Modification of Section 115(1) of the principal enactment to remove the obligation on a payer to withhold tax on payment for lottery winnings
3. Deletion of paragraph (f) under Section 119(1) (which treated tax withheld on lottery winnings as a final withholding payment in the principal enactment) because lottery winnings are no longer subject to withholding taxes
4. Deletion of subparagraph (x) of paragraph 8(1)(b) of the first schedule of the principal enactment to remove the rate of withholding tax that applied to lottery winnings

The removal of withholding requirements simplifies prize administration and is likely to enhance sector participation. Further, winners' disposable income will increase as the tax burden is removed.

Operators will need to update their payment systems and communicate changes to winners.

Elimination of withholding tax on unprocessed gold

The ITA Amendment excluded withholding tax on unprocessed gold by revising the definition of "unprocessed precious mineral" under section 85(5) of the principal enactment to exclude "gold" from the existing definition. Thus, the amendment removes the 1.5% withholding tax on payments for unprocessed gold.

Taxpayers engaged in the sale of unprocessed gold will benefit from immediate access to the full contract price of their transactions, thereby improving liquidity. Buyers are now relieved of the obligation to withhold tax on payments for unprocessed gold, thereby reducing their compliance burden and risks associated with noncompliance.

Repeal of the E-levy

The E-Levy Repeal Act has been enacted to repeal the Electronic Transfer Levy Act, 2022 (Act 1075) and the Electronic Transfer Levy (Amendment) Act, 2022 (Act 1089), effective 2 April 2025. This has led to the complete abolishment of the 1% E-levy charged on electronic money transfers from 2 April 2025. Consequently, mobile money transfers, covered bank transfers and other electronic transactions are no longer subject to the E-levy.

Nonetheless, the E-Levy Repeal Act provides that any existing rights, liabilities, or obligations related to the E-levy before the repeal shall remain valid until it is exercised or terminated as the case may be. This means, in part, that persons or transactions affected by the amendment are not relieved of any duties or obligations to settle outstanding E-levy that was incurred before the repeal date of 2 April 2025.

CG of the GRA's key guidelines to charging entities on the implementation of the E-Levy Repeal Act

The CG of the GRA, through its 2 April 2025 directive titled "Notice to all charging entities: Guidelines on the abolition of the electronic transfer levy (E-Levy)," provided the following guidelines to charging entities for the smooth implementation of the E-Levy Repeal Act:

1. All charging entities must suspend the charging of E-levy and reconfigure their system to remove the 1% E-levy charge by midnight of 2 April 2025.
2. The GRA's Electronic Transfer Levy Management and Assurance System (ELMAS) must automatically return a "no charge" status on all transactions, effective as of midnight on 2 April 2025.
3. Charging entities must refund all E-levy deductions made on or after 2 April 2025, with all proper documentations maintained and reports submitted to the GRA.
4. Charging entities must file and pay all E-levy amounts collected before 2 April 2025.
5. Electronic transfer transactions must continue to be posted to ELMAS for reconciliation until further notice.
6. Failure to maintain electronic transfer records for at least six years, in keeping with the retention requirement in Section 27(3) of the Revenue Administration Act, 2016 (Act 915) (as amended), will lead to the imposition of sanctions prescribed by law.

The CG of the GRA further indicated that regular compliance checks will be conducted to ensure that charging entities fully adhere to the directives.

Implications

The removal of the E-levy will reduce the cost involved in electronic transfers and increase disposable income, thereby encouraging the use of electronic financial services. Charging entities will need to reconfigure their platforms, process refunds for charges applied on 2 April 2025 or later and accurately maintain records of any E-levy collected before the E-Levy Repeal Act was enacted. Charging entities must also comply with the directive provided by the CG of the GRA to ensure a smooth implementation of the E-Levy Repeal Act and avoid liability for sanctions.