Government seeks to recover lost revenue through tax on foreign incomes
In an effort to make up for the revenue gap left by the abandoned VAT on electricity, the Government of Ghana is introducing a tax on the foreign incomes of resident Ghanaians. This move comes after the government faced backlash earlier this year for introducing a value-added tax on electricity, which was later scrapped, resulting in a revenue gap of around GHc 1.8 billion.
The initial plan to implement the VAT on electricity was part of revenue measures under the IMF deal, but public resistance led to its abandonment, leaving a significant shortfall in government revenue. To address this gap, the government is now focusing on ensuring compliance with the tax on foreign incomes of Ghanaians who reside in the country for 183 days or more.
According to the government, measures are being put in place to ensure that the tax on foreign incomes generates the necessary revenue to fill the gap. The Ghana Revenue Authority (GRA) is mobilizing its efforts to implement this tax, targeting resident Ghanaians specifically and not Ghanaians living abroad.
The GRA has also announced a voluntary disclosure aspect of the measure, encouraging taxpayers to come forward and declare their foreign incomes to have the interest on their accounts waived. The implementation of this tax has already begun, with letters being drafted to inform account holders of the new measure.
Finance Minister, Dr. Mohammed Amin Adam, has asked for the public’s understanding as the government introduces new measures to restore the economy. The government is confident that compliance with the tax on foreign incomes will help bridge the revenue gap and contribute to the overall fiscal consolidation of the economy.
