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Opinions of Friday, 19 November 2021

Columnist: Dean Mensah

Re: Non-bank surrogates like MoMo and taxation is unconstitutional

Mobile money vending point Mobile money vending point

The idea that the Ministry of Finance(MOF), wants to tax other bank surrogates like non bank transactions etc. is baseless and with merit. That means if you borrow money using any of these momo apps, the money will be double taxed.

Generally, it's the middle or poor who deposits less money frequently into their bank account from outside sources to help them survive.

Momo taxation is unconstitutional.

If MOF wants to extend entities reporting such non bank transactions, improve tax compliance by non-banks entities, report inflows & outflows etc., then that's fine. However, MOF cannot tax momo transactions.

Levying of tax on momo type transactions requires constitutional amendment from Parliament to define what's taxable.

First off, GMOF cannot authorize its agencies to expand what is taxable at all unless Parliament approves it.

Second, the momo taxation proposal does not specify what particular reporting standards would be adopted.

If MOF claims that borrowed money should be taxed, then that's without any merit and validity, too. Personal loans are not considered income and cannot be taxed unless they are forgiven.

MOF may not be able to distinguish what is borrowed money, even if it is momo transaction and MOF cannot subject that to taxation. Loan proceeds have never been construed as income and hence have never been taxable. I suggest the momo taxation should be abolished.