Government through Ministry of Finance has directed the Electricity Company of Ghana, Ltd (ECG) and the Northern Electricity Distribution Company (NEDCO) to suspend the implementation of the Value Added Tax (VAT) on residential electricity consumption.
In a press statement on Wednesday, February 7, the Ministry said the implementation should be put on hold to make way for stakeholder engagements.
“On behalf of the Government, MoF would like to inform ECG and NEDCO to suspend the implementation of the VAT directive pending further engagements with key stakeholders including Organised Labour.”
The Ministry says it expects the engagements to birth innovative, robust, and inclusive approaches to bridging the existing fiscal gap, while bolstering economic resilience.
The Finance Minister, Ken Ofori Atta, in a letter dated December 12, 2023, directed the ECG and NEDCO to liaise with the Ghana Revenue Authority (GRA) to implement VAT for residential customers of electricity above the maximum consumption level specified for block charges for lifeline units.
The implementation was scheduled to take effect on January 1, 2024, in line with Sections 35 and 37, and the First Schedule (9) of the Value Added Tax (VAT) Act, 2013 (ACT 870).
However, in recent days, stakeholders including Organised Labour of the Ghana Trade Union Congress (TUC) have kicked against it noting it will take a negative toll on businesses.
It also threatened to stage a nationwide demonstration on February 13, to demand the total withdrawal of the directive.