The E-levy and Merchant Payment Exemption in Ghana

Abstract

Mobile money-enabled digital merchant payments have significant promise for enhancing tax compliance in lowincome countries, and addressing persistent challenges. First, digital merchant payments offered by mobile money providers guarantee greater accessibility to safer and faster formal payment. Second, they help businesses to keep comprehensive records of their activities, expenses, and receipts – enhancing accuracy of tax filing, and perceptions of the tax administration’s monitoring and enforcement capabilities. Third, they improve businesses’ perceptions of the transparency and predictability of the tax system, by using more precise digital information for tax calculations. In addition, governments can use digital merchant payments to encourage business formalisation, by exempting them from new taxes on mobile money transactions. Many African governments use this strategy, while taxing other transaction types – such as mobile money withdrawals and person-to-person transfers.