Cabinet to remove 15% VAT on electricity

There has reportedly been a unanimous decision at a Cabinet meeting on Friday, February 2, 2024, to abandon the previously sanctioned policy of imposing a 15% Value Added Tax (VAT) on electricity.
According to Asaase Radio, this implies that consumers of electricity will no longer be obligated to pay the contentious 15% VAT on top of their utility bills.

In response to the negative reception of the proposed policy by entities such as the Trade Unions Congress (TUC), despite its prior approval by both the Cabinet and Parliament, the government has opted to reassess its stance and reverse the decision.

Furthermore, the government has agreed to engage in discussions with the International Monetary Fund (IMF) to reach a consensus on compensating for the anticipated revenue shortfall resulting from the abandonment of the VAT on electricity policy.

Meanwhile the general sectary of the civil and local gov’t Staff Association of Ghana CLOGSAG, Dr. Isaac Bampo Addo has debunked receiving any letter of which the government is removing the VAT ON ELECTRICTY.
The resolution to address this deficit may involve additional spending cuts.

Regarding the final decision on the policy, whether it will be completely scrapped or significantly reduced, sources familiar with the Cabinet decision suggest that clarity will emerge following engagements with the IMF.
The Organised Labour, in response to the directive for the implementation of the 15% VAT on residential electricity consumption by ECG and NEDCO, held a meeting on February 2, 2024.

Subsequently, they decided to stage a nationwide demonstration on Tuesday, February 13, 2024, urging the government to withdraw the directive.