Power producers in the Republic of Ghana have been directed to charge Getfund Levy of 2.5 percent, National Health Insurance Levy (NHIL) of 2.5 percent and Value Added Tax (VAT) at a standard rate of 12.5 percent on the value of power supplies to the Electricity Company of Ghana (ECG).
The directive was given by the country’s revenue authority, Ghana Revenue Authority (GRA).
The directive comes barely a month after the Chief Executive Officer of the Chamber of Independent Power Producers, Bulk Distributors and Consumer called for the removal of these inessential taxes on electricity.
These levies and charges, he said do not only create inconvenience and burden to consumers but also weaken the capacity for growth as a nation and make distribution companies (discos) uncompetitive.
“Complete removal of these taxes and a reduction in gas price will make Ghana’s position as one of the benchmarks in the sub-region and bring visible economic relief to the country,” he stressed in an article copied to energynewsafrica.com.
However, in a statement signed by the Acting Commissioner General, Ammishadai Owusu-Amoah said the Authority’s attention was drawn to a letter purported to be an agreement between the erstwhile VAT Service and ECG and some power producers which stated that the VRA should zero rate supplies to ECG.
This, the GRA said, is in contravention to the Value Added Tax, 2013 (Act 870) which does not list supply of energy and capacity charge as one of the items that should be zero-rated.
“We wish to state that Section 36 of the Act which provides for zero-rating of supply refers to the Second Schedule of the Act. However, the Second Schedule of the Act did not list supply of energy and capacity charge as one of the items that should be zero-rated,” GRA said.
The Authority argued that “electricity and power is a taxable activity as defined in Section 5 of the Act and all supplies to ECG is also taxable.”
By these, he said they are, therefore, directing all electricity and power producers to start charging ECG the prescribed levies under the law.
Source:www.energynewsafrica.com