Telecoms Chamber advices 0.5% e-levy on MoMo Cash Out Transactions

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Mtns Momo Payment Service
Mtns Momo Payment Service

While Ghanaians are calling for electronic transfer levy (e-levy) to be completely scrapped, the Ghana Chamber of Telecommunications (GCT), is rather proposing a reduction in the rate applicable to transfers and an introduction of 0.5% e-levy rate on cash out transactions.

The Chamber, which speaks for telcos, made the proposal in this year’s Mobile Industry Transparency Initiative Report, also known as the total tax report.

At the launch of the report, CEO of GCT, Ing. Dr. Ken Ashigbey noted that following the introduction of the initial 1.5% e-levy in May 2022, government managed to raise only GH¢482.8 million out of the GH¢ 6.9 billion that was targeted because it impacted on transaction volumes and value negatively.

The reduction in the e-levy rate to 1% has however resulted in some recovery in the volumes and values of transaction in the digital finance space.

But the Chamber noted that there is still the need for further downward revision in the e-levy rate to align it to government’s digital by default strategy.

“Our recommendation to the Ministry of Finance is to consider reducing the levy on transfer to 0.5% and introduce a 0.5% levy on cash-outs among other proposals,” the GCT said.

This runs contrary to the general public outcry for a total scrapping of the e-levy.

Currently the e-levy is only on most categories of transfers, with transfers to VAT and income tax compliant merchant wallets/accounts and between wallets and or accounts belonging to the same person exempted.

Cash out transactions are performed on wallets or accounts belonging to the owner of the wallet/account. So it is similar to having physical cash in your pocket and taking some out for a transaction. It therefore does not make sense taxing a person for taking money out of their own pockets.

What the telcos, through the Chamber, are proposing is for Ghanaians to be taxed for converting e-money in their own wallets into physical cash after the service provider had taken a fee, which some users of the service think is not a good idea.

But Dr. Ken Ashigbey said since the whole country is on a digitalization drive, and affordability is critical to the whole process, it makes sense to reduce the burden on people who transfer e-money and rather put part of the burden on people who elect to convert e-money into physical cash.

Meanwhile, former President John Mahama has promised that if Ghanaians return him to office as president in 2024 he will completely abolish e-levy.

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