This year saw the enactment of the following significant sector specific legislation:
Insurance Act, 2021 (Act 1061)
The Insurance Act, 2021 (Act 1061) which repealed the Insurance Act, 2006 (Act 724), modernises the regulatory framework for the supervision of the insurance market and aims to increase insurance penetration rates. Notably, Act 1061 creates a new category of licence, an innovative insurance or reinsurance licence, to better regulate the burgeoning insurtech sector and adds public liability insurance and professional indemnity insurance for specified persons to the list of mandatory insurance coverage.
Act 1061 creates an Insurance Education Fund to educate the public on insurance matters and provide financial support to the Ghana Insurance College for training persons in the insurance industry. It also creates an Agricultural Insurance Fund to provide financial resources to subsidize agricultural insurance premiums.
The Act also allows a foreign insurer not licensed to operate in Ghana to open a contact office in Ghana, subject to the approval and satisfaction of any other conditions imposed by the National Insurance Commission (NIC). The Act became effective on 5 January 2021.
Securities Industry (Amendment) Act, 2021 (Act 1062)
The Securities Industry (Amendment) Act, 2021 (Act 1062) amended the Securities Industry Act, 2016 (Act 929) by providing for; the conduct of investigations by the Securities and Exchanges Commission (the “Commission”) when the Commission is assisting other domestic or foreign regulatory authorities; the procedure for dealing with a request for assistance from a foreign securities regulatory authority; the issuance of codes, directives, guidelines and circulars by the Commission and for related matters.
Notably, Act 1062 modifies the administrative penalty applicable, where a person breaches or fails to comply with a code, directive, guideline or circular issued by the Commission. The Commission may now impose an administrative penalty of not less than six hundred Ghana Cedis (GHS 600) i.e. fifty penalty units and not more than two hundred and forty thousand Ghana Cedis (GHS 240,000), i.e. twenty thousand penalty units where a person fails to comply with a code, directive, guideline or circular issued by the Commission. Under Act 929, the Commission could only impose an administrative penalty of six thousand Ghana Cedis (GHS 6,000) i.e. five hundred penalty units, where a person failed to comply with a code, directive, guideline or circular issued by the Commission.
Act 1062 allows the Commission to impose any other administrative penalty or take any other remedial action the Commission considers appropriate in the interest of protecting investors and the integrity of the securities. Where a breach or non-compliance constitutes a criminal offence under the Act or Regulations issued by the Commission and the accused voluntarily makes an offer of compensation or restitution and reparation in writing to the Commission, Act 1062 also allows the Commission, following the procedure spelt thereunder, to settle the offence without instituting criminal proceedings. The Act became effective on 19 January 2021.
Ghana Infrastructure Investment Fund (Amendment) Act, 2021 (Act 1063)
The Ghana Infrastructure Investment Fund (Amendment) Act, 2021 (Act 1063) amended the sources of funding for GIIF provided for under the Ghana Infrastructure Investment Fund Act, 2014 (Act 877) (i.e. Two and half percent (2.5%) of Value Added Tax revenue, proceeds from the disposal of state-owned equity investments; and fees or other monies earned by the Fund under the Act) by adding internally generated funds. The Act also increases GIIF’s tax exemption period from five (5) to fifteen (15) years. These amendments are significant and in line with the government’s policy on the financing of infrastructure investments because they enhance GIIF’s fundraising capacity. Act 1063 became effective on 31 March 2021.
Energy Sector Levies (Amendment) Act, 2021(Act 1064)
The Energy Sector Levies Amendment Act, 2021 (Act 1064) amended the Energy Sector Levies Act, 2015 (Act 899) by imposing an Energy Sector Recovery Levy of 20 pesewas per litre on petrol and diesel and 18 pesewas per kilogram on liquified petroleum gas; and a Sanitation and Pollution Levy of 10 pesewas per litre on petrol and diesel.
Revenue generated from the Energy Sector Recovery Levy will be used to assist in the payment of capacity charges in the energy sector and its bills, including the fuel used by power plants to generate energy. Proceeds from the Sanitation and Pollution Levy will be used to improve the quality of air in urban areas; design, construct, and re-engineer waste treatment, disposal and recycling facilities, landfill sites and medical waste treatment facilities; construct sanitation facilities; support disinfestation, disinfection and fumigation of public spaces, schools, health centres, markets, and lorry parks; and provide dedicated support for the maintenance and management of major landfill sites and other waste treatment plants and facilities across the country.
It is estimated that the total receipts from the levies in 2021 will be GH¢666.2 million and GH¢311.7 million for the Energy Sector Recovery Levy and the Sanitation and Pollution Levy, respectively. Act 1064, 2021 became effective on 31 March 2021.
Penalty and Interest Waiver Act, 2021 (Act 1065)
The Penalty and Interest Waiver Act, 2021(Act 1065) granted a waiver of penalties and interests to eligible persons for the period specified thereunder. Persons who had not previously registered with the Ghana Revenue Authority (“GRA”) and those who had registered with GRA but were in arrears for the submission of returns or payment of taxes up to 31 December 2020 were eligible for a 100% waiver of penalties and interests on accumulated tax arrears up to 31 December 2020 upon satisfaction of certain conditions.
Act 1065 required eligible persons who wished to take advantage of the waiver to submit a written application and their outstanding tax returns containing a full disclosure of undisclosed liabilities to the Commissioner-General. Additionally, such persons were required to pay or make arrangements to pay all resulting taxes or assessed and outstanding taxes on or before 30 September 2021. If these conditions were met, the waiver was granted and the Commissioner-General refrained from recovering assessed penalties and interest on the tax due and commencing prosecution or other enforcement action in relation to those amounts.
The implementation of Act 1065 reduced cash flow challenges for companies and individuals who arranged with the GRA to pay their outstanding tax liabilities in full by September 2021, and encouraged persons who had not registered with the GRA and persons who had registered with GRA but were in arrears for the submission of returns or payment of taxes, to register with the GRA, submit their returns and/or pay their outstanding taxes. The Act also helped GRA to improve revenue generation. Act 1065, 2021 became effective on 31 March 2021.
The Income Tax (Amendment) Act, 2021 (Act 1066)
The Income Tax (Amendment) Act, 2021 (Act 1066) amended the Sixth Schedule to the Income Tax Act, 2015 (Act 896) to provide for concessions in specified sectors and suspension of quarterly payments for eligible persons. The amendment reduced the rate of income tax payable on the estimated chargeable income of persons engaged in certain industrial sectors such as accommodation and food, education, travel and tours, arts and entertainment sectors for the second, third and fourth quarters of 2021 to 70% of the applicable rate.
Act 1066 suspended the second, third and fourth 2021 quarterly income tax instalment payments for certain categories of self-employed persons listed in the Third Schedule to the Income Tax Regulations, 2016 (L.I. 2244) including retail traders, dressmakers and tailors, estates and accommodation agents, artisans and auto technicians as well as owners of classes of vehicles provided therein. Act 1066 became effective on 31 March 2021.
Financial Sector Recovery Levy (Act 1067)
The Financial Sector Recovery Levy (Act 1067) imposed a 5% financial sector recovery levy on the profit before tax of banks to raise revenue to support financial sector reforms and provide for related matters. The levy applies to banks regulated under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and does not apply to rural or community banks, despite any provision to the contrary in any enactment relating to a tax holiday or an exemption from a direct tax or an indirect tax applicable to a bank. The levy is also not an allowable deduction for the purpose of ascertaining the chargeable income of a person under the Income Tax Act, 2015 (Act 896).
The levy was payable in three (3) quarterly instalments in 2021. i.e. June, September and December. Moving forward, the levy will be payable in four (4) quarterly instalments – March, June, September and December. Act 1067 also allows the Minister of Finance to review the levy at the expiration of the 2024 year of assessment. Act 1067 became effective on 31 March 2021.
COVID-19 Health Recovery Levy Act, 2021 (Act 1068)
The Covid-19 Health Recovery Levy Act, 2021 (Act 1068) imposed a 1% Covid-19 Health Recovery Levy (the “Covid-19 Levy”) on the supply of goods and services made in the country and the import of goods or services, other than those exempted from Value Added Tax under the Value Added Tax Act, 2013 (Act 870). The Covid-19 Levy, similar to Value Added Tax (‘VAT”), is calculated on the value of the taxable supply of goods or services or on the value of the imports. Persons who charge the VAT flat rate are also required to charge the Levy on the supply of goods and services. The COVID-19 Health Recovery Levy Act, 2021 became effective on 31 March 2021.
Appropriation Act, 2021 (Act 1069)
The Appropriation Act, 2021 (Act 1069) repealed the Appropriation Act, 2019 (Act 1008) and authorised the withdrawal of certain amounts of money from the Consolidated Fund and other public funds to meet the government’s expenditure for the 2021 financial year. It approved the issuance of a total amount of one hundred and twenty-nine billion, thirty-two million, eight hundred and four thousand, two hundred and one Ghana Cedis (GHC 129,032,804,201) from the Consolidated Fund and other public funds to finance the specified programmes of Ministries, Departments and Agencies and other government obligations.
The Act also permitted Ministries, Departments, and Agencies to retain and use an amount of five billion, eight hundred and ninety-three million, seven hundred and seventy-two thousand, three hundred and fifty Ghana Cedis (GHC5,893,772,350) during the 2021 financial year. The Appropriation Act, 2021 became effective on 1 January 2021.
National Centre for Co-ordination of Early Warning and Response Mechanism Act, 2021 (Act 1070)
The National Centre for Co-ordination of Early Warning and Response Mechanism Act, 2021 (Act 1070) established the legal framework for the operation and administration of the National Centre for Coordination of Early Warning and Response Mechanism (the “Centre”) which has been established to detect, monitor, analyse and report on conflict indicators in response to the threats of terrorism and violent extremism in the West African sub-region. The Centre has been created to help the Ghanaian government to prepare for any eventualities and to take appropriate crisis mitigation measures in conflict situations at the national and regional levels.
The Centre focuses on five thematic areas namely: crime and criminality; governance and human rights; health and pandemics; social, economic and environmental issues; as well as security, terrorism and maritime threats. Act 1070 became effective on 10 September 2021.