The revenue authority of Ghana is proposing to impose a vehicle income tax on ride hailing services.
However, drivers of ride-hailing services in Ghana has opposed this proposal. They argue that the tax would burden their salaries, and they are pushing back against the proposal.
There is a provision in the new tax notice that states, “any commercial vehicle owner that earns income from the operation of a commercial vehicle shall pay income tax quarterly.” This provision is anticipated to go into effect on January 1, 2024.
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Ride-Hailing: A Key Player in the Digital Economy
Taxi services like Uber, Bolt, and Yango must ensure their driver partners have paid VIT before letting them work on their platforms.
The Ghana Revenue Authority (GRA) said that ride-hailing companies must ask their drivers for a soft copy of the VIT sticker, check with the GRA to make sure the stickers are actual, and send the GRA a list of all the vehicles on their sites every three months.
Many drivers who talked to the press said they didn’t expect the new tax because they already get paid by ride-hailing companies. Some drivers say that ride-hailing companies should pay taxes, not the drivers themselves. Bolt and Uber take 20% of each trip, while Yango is said to take 18%.
Kwame, an Uber driver, told the press, “Many of us already struggle because of the way commissions are set up now.” “Adding another tax on top of the price of petrol and car repairs is like making our problems worse.”
John, another Uber driver, said, “They are cheating us.” I know many drivers are stuck at home because they don’t like how much income ride-hailing companies take. What will happen to the fares if the Ghana Revenue Authority adds a new tax?”
A breakdown on GRA’s website says ride-hailing cars are “Class A” and will pay 12 Ghana Cedis every three months for 48 GHC a year. The agency requires all people who drive business vehicles to get VIT stickers from any Domestic Tax Revenue Office. The sticker needs to be stuck on the front window of the car.
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Ghana’s ride-hailing tax update
Ghana’s most recent attempt to impose taxes on ride-hailing businesses is the new regulation that has been implemented. The Driver and Vehicle Licencing Authority (DVLA) of Ghana established the “Digital Transport Guidelines” in April. These guidelines placed a tax on every ride-hailing trip.
As a result of the levy, each of the five ride-hailing companies now operating in Ghana would be required to impose an additional fee of one Ghana cedis on each passenger that uses their platforms. The action, on the other hand, was met with criticism from individuals who were already experiencing the effects of a faltering economy.
Africa has one of the lowest ratios of taxes to gross domestic product (GDP). According to a report published by the Organisation for Economic Co-operation and Development (OECD), Ghana’s tax-to-GDP ratio in 2021 was 14.1%, the highest ever. This ratio was lower than the average of the 33 African countries in 2023, which was 15.6%.