What are the disadvantages of e-direct debit in Ghana that make it controversial?

By on September 2, 2022 0

The Ghana Revenue Authority (GRA) has introduced an electronic transfer tax (e-levy) in the country’s 2022 budget statement. The GRA claimed that the tax presents an innovative way to capture revenue in the digital space. He made the move after the country saw a shift from traditional payments to digital payment systems supported by massive growth in mobile transactions, e-commerce and social media shopping. But not everyone in Ghana welcomed the new tax measure as it has drawbacks. So what are the disadvantages of e-debit in Ghana?

Photo: @GhBusinessNews
Source: UGC

While the e-levy aims to increase Ghana’s tax base and support entrepreneurship and youth employment, it has been controversial since the Government of Ghana introduced it. For example, some economists say it threatens government efforts to make its services digital. Moreover, it prolongs the country’s plans to introduce its digital currency.

Although the Ghanaian parliament passed the bill on May 1, 2022, a minority group of parliamentarians have vowed to challenge it in court. But the advantages and disadvantages of e-debit in Ghana are obvious to everyone.

Read also

Political upheaval in the UK and fears of stagflation weigh on the pound

What are the disadvantages of e-direct debit in Ghana?

Before it was submitted to parliament for debate, many people immediately pointed out the challenges of e-direct debit. The levy is a tax on electronic transfers charged at the time of transfer. This allows the GRA to charge 1.5% of the wire transfer value. But the tax has its downsides, including:

1. It increases mobile money fees

Mobile money has grown significantly in Ghana from 155 billion GHS to 986 billion GHS between 2017 and 2021. This increase is due to low transaction fees and wide adoption. However, the tax will increase mobile phone charges by 1.5%, except for people who pay less than GHS 100 per day.

2. Taxation threatens the financial security of the informal sector

One of the disadvantages of the e-levy in Ghana is that it inhibits the progress of the informal sector from contributing to the pension system. Currently, the coverage of pension systems in Ghana is limited to small segments of those in the formal sector.

Read also

IMF approves resumption of massive loan program in Pakistan

Disadvantages of Electronic Direct Debit in Ghana
A person collecting taxes with a machine. Photo: @GhBusinessNews
Source: UGC

By raising the tax, the government reduces the amount of money that people in the informal sector would have contributed to the private pension scheme.

3. Electronic Direct Debit can force the return of cash transfers

The policy taxes digital transactions and targets mobile money transfers. One of its challenges is that it increases the likelihood that people without bank accounts will revert to cash transactions.

As a result, it threatens the financial exclusion of the few, especially the rural poor with limited financial payment options. Furthermore, it hampers the country’s efforts to migrate people to digital payments and offer digital services.

4. Tax policy threatens online sales

Ghanaians are buying more items online, especially from e-commerce stores and social media stores. Additionally, many are using mobile money to make their payments. Therefore, the tax on digital payments threatens online sales. Moreover, since social media shopping involves peer-to-peer transactions, the policy threatens to increase job loss as online sales decline.

Read also

Egypt dims lights to boost foreign exchange reserves

Disadvantages of Electronic Direct Debit in Ghana
A person holding a wad of Ghanaian banknotes. Photo: @MoF_Ghana
Source: UGC


  1. Has electronic debit been approved in Ghana? The Ghanaian parliament approved the bill on May 1, 2022.
  2. Does e-direct debit affect collection? This does not affect withdrawals. In addition, transactions such as bank deposits, withdrawals, and mobile money receipts or deposits at mobile money agents or retail outlets are not part of the electronic direct debit tax policy.
  3. Does e-direct debit affect bank transfers? The levy affects cumulative bank transfers over GHS 20,000. For example, a customer transfers money from his ABC bank account to an XYZ bank account on an instant game platform. If the amount exceeds GHS 20,000, a direct debit will apply to the excess amount.
  4. Does e-direct debit affect merchants’ SIM card? It does not apply to mobile money merchant SIM cards registered for VAT or income tax.
  5. Does e-Direct Debit affect mobile money lending? Direct debit does not apply to loan repayments if the person receiving the money has registered with the GRA for income tax or VAT. Otherwise, the person sending the money will have to pay the tax.
  6. Does the e-levy apply to utility and airtime payments? GRA does not charge an electronic levy on airtime and utilities if the entity providing the service is registered with the tax collector for VAT or income tax, and the person has used a service of payment to make the payment.
  7. Are ATM withdrawals and SWIFT transfers electronically debited? ATM withdrawals and SWIFT transfers are not affected by the electronic tax.

Read also

Chief of staff’s office accused of spending almost all of 2020 budget on cars

Electronic Levy is a new tax base approved by the Government of Ghana on May 1, 2022. It is a tax imposed on electronic transfers charged at the time of transfer. Although it has opened up Ghana’s tax base, it is also controversial and has several drawbacks. One of the downsides of e-levy in Ghana is that it prolongs Ghana’s plans to have its digital currency and threatens the government’s efforts to make its services digital.

Yen.com.gh shared an article on Ghana’s top 5 serious social problems and their solutions. These social problems affect the general well-being of the country, whether they affect you directly or not. Therefore, gradually solving these problems is the best way to achieve economic development.

Ghana has its fair share of social problems, and if you are aware of the prevailing events in the country, you might get an idea of ​​what these problems are and what they mean for everyone.

Subscribe to watch new videos

Source: YEN.com.gh