Consider taxing digital transactions to increase domestic revenue – Tax Analyst to govt

A Tax Analyst and Lecturer at the Tax Research and Training Institute, Fred Awutey, has suggested that the Finance Minister should in his 2020 budget and financial presentation, consider taxing digital or electronic service transactions to increase domestic revenue.

According to him, the move could be replicated in all sectors of the economy to allow government track digital or electronic payments and make revenue projections based on it to improve tax compliance.

“Section 16 of Act 870 makes provision for the taxation of electronic or digital transactions and the Finance Minister in his 2020 budget presentation needs to implement those tax laws to boost domestic revenue generation rather than increasing tax while trying to review the tax exemptions that ultimately increases tax revenue,” Awutey said to reporters.

“We need to encourage potential taxpayers to pay their taxes and we can do so by introducing the Electronic or Digital Services Taxation on companies providing such services. India for example has done that by introducing a 5 percent tax on digital or electronic services, Nigeria and the United Kingdom are yet to implement theirs in 2020,” he explained.

Finance Minister, Ken Ofori-Atta is expected to present the 2020 budget and financial statement before parliament on Wednesday, November 13.

Meanwhile, the Chairman of the Finance Committee of Parliament has said that it does not expect the introduction of new taxes in the yet-to-be-read budget.

Dr. Mark Assibey-Yeboah indicated that the introduction of a new tax may burden the Ghanaian populace.

London-based advisory firm, Economist Intelligence Unit (EIU) has however predicted that government will struggle to lower its expenditure in the run-up to the 2020 general elections in December.

Despite government last year passing the Fiscal Responsibility Act aimed at limiting future budget deficits to a maximum of 5 percent of Gross Domestic Product, the EIU expects the government to record a 5.5 percent budget deficit come next year.