Instruct ECG to stop charging VAT on power – Chamber of Independent Power Producers to GRA

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The Chamber of Independent Power Producers has asked the Ghana Revenue Authority (GRA) to direct the Electricity Company of Ghana (GRA) to desist from charging VAT, GETfund and NHIL levies on electricity.

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A letter from the GRA dated 4th May 2020 had announced the directives, indicating that such services will no longer be zero-rated.

The GRA subsequently denied issuing such a directive, following a call from the Ranking Member on Parliament’s Mines and Energy Committee, Adam Mutawakilu for a withdrawal.

The Chamber, in a statement, asked for an official communication on the withdrawal.

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“Further to GRA’s denials as published on www.ghanaweb.com of Friday, 16th May, 2020, we would like to call on the Ghana Revenue Authority to formally circulate a letter to the concerned stakeholders in the power sector withdrawing their earlier directive and direct the Electricity Company of Ghana to specifically desist from charging Ghanaians those taxes with immediate effect.”

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GRA directive
The GRA issued the directive after sighting a notice dated March 13, 2001, which waives VAT on electricity supplied to ECG.

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The GRA said the agreement was contrary to the Value Added Tax, 2013 (Act 870) which did not list supply of energy and capacity charge as one of the items that should be zero-rated.

“It has come to our notice that some electricity producing and power supplying companies do charge VAT, GETfund and NHL, at zero rates to the Electricity Company of Ghana Limited contrary to the Value Added Tax Act, 2013 (Act 870).”

“We wish to state that Section 36 of the Act which provides for zero-rating of supply refers to the Second Schedule of the Act. However, the Second Schedule of the Act did not list supply of energy and capacity charge as one of the items that should be zero-rated,” GRA said in a statement signed by its Acting Commissioner-General, Ammishadai Owusu-Amoah.

The Chamber also asked for the disclosure of the “percentage these add-on taxes occupy on the End User Tariff is the limitation for PURC to give cost compensatory tariff to fix the Annual Revenue Requirement shortfalls of the sector.”

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