The growth and sustainability levy will collapse businesses


Ghana is one of the countries in the World that has very high tax rates. It is true that every country in the world needs to raise revenue through taxation and other means of raising revenue for growth and development. However, every effective and efficient tax system calls for stakeholder engagements to discuss and agree on various tax rate in various sectors of the economy.

Many African countries have now resorted to the imposition of levies in addition to the known tax types to raise the needed revenue for development. These have resulted in the collapse of many institutions because apart from the inflationary hikes in the economy, the cost of doing business has become so high that it has seriously affected the cost of living.

In Ghana, the imposition of harsh taxes and levies has resulted in the escalating prices of goods and services, which has brought unprecedented hardship to Ghanaians. In 2001, the Government introduced the National Reconstruction Levy Act, 2001(Act 597) to raise the much-needed revenue at the time for development.

This Levy was imposed on profit before tax and was not a deductible Expense. The law was applicable to all companies except rural and community banks. The profits affected were for the 2001, 2002, 2003, 2004 and 2005 years of assessment.  This law was subsequently amended in 2006 by the National Reconstruction Levy (Amendment) Act, 2006 (Act 698) for a further period of two years, 2005 and 2006.

Then came the National Fiscal Stabilization Levy Act, 2009 (Act 785). This was an ACT to impose a special levy on specified companies and institutions in order to raise revenue for fiscal stabilization of the Economy and to provide for related matters.

This was a levy of 5% on Profit before Tax, and was not an allowable deduction for the purpose of ascertaining the income of a person under the Internal Revenue Act, 2000 (Act 592). This levy was to affect profits for 2009 and 2010 years of assessment only. The National Fiscal Stabilization Levy then went through various amendments to extend the duration and also to expand the coverage. These were Act 812 of 2010, Act 862 of 2013, Act 958 of 2017 and Act 1011 of 2019.

The levy imposed by Act 1011 of 2019, was to affect profits before tax for the 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023 and 2024 year of assessment. The National Fiscal Stabilization Levy is charged at the beginning of the year of assessment but not at the end of the year, and is to be paid quarterly, 31st March, 30th June, 30th September and 31st December.

The National Fiscal Stabilization Levy has outlived its purpose of imposition and when it has to be removed to ease cost of doing business, it is rather being rebranded, replaced and extended in coverage and application. The NFSL has now metamorphosed into Growth and Sustainability Levy. This is surely a mark of inconsistency in tax policy. If revenue mobilization is the objective, why not engage stakeholders and review the tax rates for the various sectors of the economy?

Government has now introduced a new Bill to Parliament titled Growth and Sustainability Levy Bill 2022 to raise revenue for growth and fiscal sustainability of the economy. According to the memorandum accompanying the Bill, the Coronavirus Disease (COVID-19) pandemic led to a significant reduction in revenues and increased expenditure enormously. This has been compounded by the Russian-Ukraine war resulting in unprecedented global crises, depreciation in currencies and impacted living conditions and inflation levels.

The application of this levy is limited to profits before tax or production for the 2023, 2024, and 2025 years of assessment.

This Levy (if passed), is to be imposed on profit before tax of the companies and institutions and on production in the case of mining, upstream Oil and Gas Companies specified under three different categories as follows:-

Category A – Rate of Levy: 5% on Profit before tax

  1. Banks
  2. Non-Bank Financial Institutions
  3. Insurance Companies
  4. Telecommunications Companies liable to collect and pay the Communications Service Tax under the Communications Service Tax Act, 2008 (Act 754).
  5. Breweries
  6. Inspection and Valuation Companies
  7. Companies providing mining Support Services
  8. Bulk Oil Distributors
  9. Oil Marketing Companies
  10. Communication Tower Operators
  11. Companies providing upstream Petroleum Services
  12. Companies and Institutions registered by the Securities and Exchange Commission
  13. Specialised Deposit – Taking Institutions
  14. Electronic Money Issuers
  15. Shipping lines, maritime and airport terminals


Category B – Rate of Levy: 1% of gross production

Mining Companies and Upstream Oil and Gas Companies

Category C – Rate of Levy: 2.5% of Profit before tax

All other entities not falling within Category A or Category B

A Levy on profit before tax which levy is not a deductible expense is a disguised increase in tax rates and worse in impact as it is even not based on actual profit and production.

This thing started as National Reconstruction Levy, then styled as National Fiscal Stabilization Levy, and now clothed as Growth and Sustainability Levy.

It has become a permanent feature in our income tax law; but it is a tax on profit before tax. And they are even trying to bring back the Minimum Chargeable Income Tax, which is based on Turnover irrespective of your profitability. This is policy inconsistency galore. !!!!

The Growth and Sustainability Levy is a crude way of dragging in all registered entities into the existing National Fiscal Stabilization Levy, which hitherto was limited to selected Banks, excluding rural and community banks. This is rebranding. It is a cheap way of generating revenue.

In the case of banks, they are already being charged the Financial Sector Recovery Levy of 5% of their Profit before tax. They are to pay additional 5% of Profit before tax as Growth and Sustainability Levy (if the law is passed).

It is a fallacy to say that the Growth and Sustainability Levy seeks to repeal the National Fiscal Stabilization Levy. That cannot be true. When a tax law is Repealed, you do not lift about 80 to 90% of provisions of the old law and put it in the “new law’.

The Growth and Sustainability Levy Bill 2022, is therefore An Amendment to the National Fiscal Stabilization Levy but NOT a Repeal. The New Bill is just replacing the NFSL and expanding its coverage, but not repealing it.

In my opinion, I think it is just punitive window dressing, seeking to collapse more Banks, other entities, Mining Companies and upstream Oil and Gas Companies.

Just imagine that Category B Companies are to be levied 1% of gross production, which is NOT a deductible expense. This is in addition to the 35% Company Income Tax to be paid at the end of the year of assessment. Does this make sense? This will certainly be an increase in the cost of doing business. So therefore, if mining and upstream oil and Gas Companies will pay a levy of 1% on gross production, what then becomes of the stability clause provided in the mining and petroleum agreements?

We must not forget that when levies become taxation norm, then we risk expropriation of income. When tax rates are pegged too high, tax avoidance is inevitable. We have too much of complexity in tax administration in recent times in Ghana.

As we speak, can you believe that we have as many as 14 taxes and levies on imported raw materials?

These are:-

  1. Import Duty
  2. Import Value Added Tax (VAT)
  3. National Health Insurance Levy
  4. Covid-19 Levy
  5. Get Fund Levy
  6. Net Charges
  7. ECOWAS Levy
  8. Shippers Levy
  9. Disinfection Levy
  10. MOTI e-one district one factory fee
  11. Inspection Fee
  12. African Union Levy
  13. Special Import Levy
  14. EXIM Levy

When we come to taxes and Levies on petroleum products we have 13 levies and taxes as follows:-

  1. Energy Debt Recovery Levy
  2. Energy Fund Levy
  3. Energy Sector Recovery Levy
  4. Price Stabilization and Recovery Levy
  5. Road Fund Levy
  6. Sanitation and Pollution Levy
  7. Special Petroleum Tax
  8. Unified Pricing Petroleum Levy
  9. Primary Distribution Margin
  10. BOST Margin
  11. Fuel Marketing Margin
  12. Marketers’ Margin
  13. Dealers (Retailers/Operations) margin

Why are we doing this to ourselves?

The Decoupling of the National Health Insurance Levy, Get Fund Levy and Covid-19 Levy on our VAT invoice, has increased the effective VAT rate on goods and Services to 21.9% and still counting.

The re-characterization of the NHIL and GetFund Levy where taxpayers are not allowed to take credit but treat as cost, has resulted in the increased cost of production.

Looking at all that we have discussed so far, there is no justification for this Growth and Sustainability Levy Bill to be passed by Parliament. It will just cripple and collapse businesses and further create unemployment, hardship and insecurity in the country. Many more investors may shy away from coming to invest in Ghana.  Let our Policy Makers think outside the Box.

The writer is a Fellow, Institute of Chartered Accountants Ghana (ICAG).

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