Professional services firm, PwC, is casting doubt over whether the government would achieve its revenue target from indirect taxes in 2025.
Despite a 6.50% shortfall in revenue from indirect taxes in 2024, the government is seeking a 24% increase in 2025 to GH¢99.77 billion.
According to PwC, achieving this target along with the Value Added Tax (VAT) and import tax reforms and the removal of certain levies will require substantial enforcement measures to generate the necessary revenue and address economic challenges.
It therefore proposed measures critical to achieving that.
Motor vehicle insurance in Ghana was exempted from VAT in 2017 to enhance nuisance taxes, but in 2024, the government reintroduced VAT on non-life insurance policies, including motor vehicle insurance.
PwC said expanding the list of exempted raw materials and imported essential medicines is likely to be well received by the pharmaceutical industry consumers and suppliers, as it could enhance access to vital drugs at more affordable prices.
It also added that exempting raw materials and essential medicines from VAT is justified as it will improve access to essential services and aligns with the United Nations Sustainable Development Goals.
On the VAT reform, it pointed out that these reforms aim to address inefficiencies and reduce the tax burden on businesses and households.
On abolishing the Electronic Transaction Levy, PwC said though the levy aims to ease the financial burden on users of electronic transfer modes and promote the growth of financial services, there are concerns that the alternate measures such as VAT on charges could not have reduced the cost impact on digital transactions.
It added that it will be interesting to see how this removal impacts the financial services sector, including fintech and mobile money.
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