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Financial Sector Recovery Levy takes effect from June 2021

April 20, 2021
Stephen KotochiebyStephen Kotochie
in Economy, One Top Story
0
Financial Sector Recovery Levy takes effect from June 2021

The Ghana Revenue Authority(GRA) has announced that the payment of the Financial Sector Recovery Levy (FSRL) will commence on 30th June 2021.  According to the GRA, the FSRL is payable in quarterly instalments. However, for 2021, the levy is payable in three instalments commencing from 30th June 2021.

The government proposed the introduction of the financial sector clean-up levy in the 2021 Budget Statement and Economic Policy. Per this levy, Banks will pay 5% tax on their profit before tax.  According to the government, this will help defray outstanding commitments in the sector. The government puts the cost of the financial sector clean-up at GH¢21.0 billion. Meanwhile, the government notes that it will review the levy in 2024.

Moreover, the Finance Ministry has indicated that the financial sector clean-up and the refund of monies to depositors have restored investor confidence.  Likewise, it has “protected the hard-earned savings of millions of Ghanaians”.

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New Tax Policies

Meanwhile, the GRA informs the general public, especially taxpayers that Parliament has passed three new tax laws. It has also amended two existing laws effective 2021.  The new tax laws include the Penalty and Interest Waiver Act, 2021 (Act 1065); COVID-19 Health Recovery Levy Act, 2021 (Act 1068), and the Financial Sector Recovery Levy Act, 2021 (Act 1067). Parliament also made amendments to the Energy Sector Levy (Amendment) Act, 2021 (Act 1064) and the Income Tax (Amendment) Act, 2021 (Act 1066).

The COVID-19 Health Recovery Levy and the Energy Sector Levy will take effect from 1st May 2021. Act 1068 imposes a 1% levy on the supply of goods and services made in the country. The ACT, however, excludes exempt goods or services and import of goods and services other than exempt imports. The Levy also applies to the supply of goods subject to the VAT Flat Rate.

Meanwhile, the GRA clarified that “the COVID-19 Health Recovery Levy is not allowable as an input tax deduction”.

Also, Act 1065 allows a waiver of penalties and interests on accumulated tax arrears up to December 2020 for persons who make arrangements to pay the principal tax. The GRA notes that businesses can apply for the waiver between April 1 and September 2021. The period of payment of the waiver lasts until 31st December 2021.

“The waiver does not apply to payments and returns due from 1st January 2021 under an enactment administered by the Commissioner-General”.

Amendments to tax laws

Furthermore, Act 1064 has added two additional sections, 5A and 5B. Section 5A covers the imposition of an Energy Sector Recovery Levy of 20 pesewas per litre of petrol/diesel. It also includes the imposition of 18 pesewas per kg on Liquefied Petroleum Gas (LPG). On the other hand, section 5B allows for the imposition of a Sanitation and Pollution Levy of 10 pesewas per litre of petrol and diesel respectively.

Also, Act 1066 amends the 6th schedule to the Income Tax Act 2015 and provides for a 30% rebate of income tax due for the 2nd, 3rd, and 4th quarters of 2021. This covers taxpayers in the accommodation and food, education, travel and tours, and arts and entertainment sectors.

In the same vein, Act 1066 allows for the suspension of quarterly income tax instalment payments for self-employed persons applying the Income-tax stamp system. It also applies to owners of taxis and trotros under the Vehicle Income Tax (VIT) system. This will also cover the 2nd, 3rd, and 4th quarters of 2021.

However, to benefit from these concessions, the person must be registered with the Ghana Revenue Authority. Also, the person must have made instalment payment for the first quarter of 2021. Moreover, he/she must continue to discharge any other obligation that the Commissioner-General will specify.

READ ALSO: This is not the time to fight for supremacy- Ben Ephson to NDC

Tags: 2021 Budget Statement and Economic PolicyCOVID-19 Health Recovery Levy ActeconomyEnergy Sector Recovery LevyFinancial Sector Recovery LevyghanaVehicle Income Tax

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