Oil producer Ghana has joined the growing group of African governments which tax electronic transactions.The country is estimated to have up to five billion barrels of oil in reserves. Finance Minister Ken Ofori-Atta has announced that electronic transactions will be taxed from February 1, 2022, at a rate of 1.75% of the value of the transaction in order to “widen the tax net and rope in the informal sec t or ”.Mobile money payments, bank transfers, merchant payments and inward remittances – including those of oil and gas companies – will all be subject to the tax. The originator of the transactions will bear the charge, except for inward remittances, which will be borne by the recipient.There is an exemption for transactions up to $16 per day. According to the finance minister, the total digital transactions for 2020 were estimated to be about $81 billion compared to $12.5 billion in 2016. Huge growth in just five years. PK Senyo, associate professor in FinTech & Information Systems at the University of Southampton, says although there has been criticism of the tax, for Ghanaians there is no viable alternative to e-money. Writing in The Conversation, he says “though this e-levy may force some people to resort to the use of cash, for the majority, there is no viable alternative. “At the moment, electronic payment, especially mobile money, is the most efficient and cost-effective means of transferring money since it is widely accessible in Ghana.“Its wide use is because of its convenience – especially in rural areas. The only alternative is to use banks, which have limited branches. And banks themselves are now digitising their services to minimise the use of cash”.Other governments will be following the Ghanaian developments.“Given the potential revenue the government can generate, and as it is unable to devise any innovative solution to tax the informal sector, mobile money taxation appears to be the easy way out,” writes Senyo.Uganda, which has the potential to be among Africa’s top five oil exporters by 2025, introduced a 1% tax on the value of all mobile money transactions in July 2018. After widespread public outcry and significant challenges in implementation, the tax rate was adjusted to 0.5% and restricted to withdrawals in November 2018.According to a study by Norman Mekgoe and Mohamed Hassam of Deloitte, other countries that have introduced taxes on digital services include Kenya (1.5% through a “digital marketplace” introduced in January 2021); Tunisia (3% on gross income from the sale of computer appliances and digital services introduced in January 2020); and Zimbabwe (5% on gross income from satellite broadcasting services and on e-commerce operators introduced in January 2019).Oil giant Nigeria has plans to introduce a 30% tax on a wide range of electronic transactions. South Africa’s attempts to tax electronic commerce are buried in a November 2000 Green Paper, although VAT is applicable to some electronically supplied services.
