Suspend implementation of VAT on electricity – Finance Ministry directs ECG, NEDCO

The Ministry of Finance has directed the Electricity of Ghana and the Northern Electricity Distribution (NEDCO) to suspend the implementation of the Value Added Tax (VAT) directive.

This is until further engagements with key stakeholders including organised labour is completed.

In a statement, the Ministry of Finance said it expects that these engagements will birth innovative, robust, and inclusive approaches to bridging the existing fiscal gap while bolstering economic resilience.

Reference is made to the Ministry of Finance’s (MoF) letter to the Electricity Company of Ghana, Ltd (ECG) and the Northern Electricity Distribution Company (NEDCO) on the above subject dated 12th December 2023; as well as MoF’s Press Statement on the subject issued on 30th January 2024. 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 expects that these engagements will birth innovative, robust, and inclusive approaches to bridging the existing fiscal gap while bolstering economic resilience”.

Organised Labour had earlier insisted on its demand for the complete withdrawal of the 15% VAT on electricity.

The 35 labour unions therefore pledged to stage a demonstration if the government refuses to withdraw the controversial levy.

There are also concerns that the implementation of the VAT on electricity will would push inflation up and thus derail the government macroeconomic targets captured in the International Monetary Fund-support programme.