The Ministry of Finance has directed the suspension of the implementation of the 15% Value Added Tax (VAT) on electricity consumption by residential consumers.
This move is aimed at facilitating additional discussions with stakeholders, including organized labor.
The decision to impose a 15% VAT on the domestic consumption of electricity was initially announced by Finance Minister Ken Ofori-Atta during the 2024 budget reading in parliament last year.
However, since the beginning of this year, the proposal has encountered strong opposition, with organized labor threatening to protest if the government does not reverse the decision.
A statement from the Public Relations Unit of the Finance Ministry states,
“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 Press statement on the subject dated 30th January 2024.
On behalf of the government, MoF would like to inform the ECG and NeDCO to suspend the implementation of the VAT directive pending further engagements with key stakeholders, including organized labor.
The ministry expects that these engagements will lead to innovative, robust, and inclusive ideas to bridge the existing fiscal gap while bolstering economic resilience.”