Plan to address tax exemption phenomenon before Cabinet committee – Osafo Maafo

Source Citinewsroom

Senior Minister Yaw Osafo Maafo says plans are in place to limit the amount of money lost from tax concessions.

Speaking in an interview, Mr. Osafo Maafo indicated that the Finance Minister viewed the issue with some worry.

For example, fiscal data from the Ministry of Finance showed that import exemptions granted to foreign companies and other institutions rose by 15.5 percent to GHc 2.6 billion in 2017.

Most recently, the President in his 2019 State of the Nation Address noted that tax exemptions in respect of import duties, import VAT, import NHIL, and Domestic VAT had grown from GHc 392 million (0.6% of GDP) in 2010 to GHc 4.66 billion (1.6% of GDP) in 2018.

In view of this, Mr. Osafo Maafo said the Finance Minister had put together a document to deal with the losses.

“The Minister of Finance is so worried about these tax concessions that he has a draft paper before a committee of Cabinet to examine in detail this whole idea of exemptions and I think very soon he will hit Parliament and get this concession mentality addressed.”

The Minister is of the view that the state “should make the taxes part of the business cost and let people pay for the taxes.”

“The rate at which we are losing money through tax concessions to me is a worry and I think the [Finance] Ministry feels strongly about it and has worked on it and we are certainly going to get something done on tax exemptions.”

In his delivery of the 2020 budget, the Finance Minister recounted some of the tax incentives provided to the private sector business promoters.

They included a five-year corporate tax holiday for 1D1F companies, exemption from import duties, taxes and levies on equipment, machinery, and parts and further exemptions from payment of duties and levies on raw materials.

Tax incentives are generally viewed as an incentive for foreign direct investments (FDIs).

In the 2020 budget statement, the Finance Minister said the drive for more FDIs will revolve around better resourcing of the Ghana Investment Promotion Council (GIPC).

The government has established an Inter-Ministerial Committee to provide a coordinated policy guidance and support to the FDI drive, according to the budget.

The exemptions are mostly granted to businesses coming into the country through the Ghana Free Zones Authority (GFZA), GIPC as well as other specialised institutions.

One of the recent contentious exemptions was the decision to grant a $259 million tax concession to AngloGold Ashanti (AGA) as part of moves to re-open its Obuasi Mine, which was shut down in 2014.

Revenue leaks

The Ghana Revenue Authority has expressed concerned with revenue leaks from concessions and plans to review the country’s tax exemption laws.

The GRA is concerned that the wholesale exemptions have resulted in exploitation and tax evasion.

The Commissioner in charge of Domestic Tax Revenue Division, Kwasi Gyimah Asante believes this move should help the government in meeting its revenue targets.

“We have a team that is looking at exemptions generally and there is going to be a law on exemptions so that before a company is granted the exemptions, it should be within the law. The law is also going to address all other issues that affect everyone be it to individuals, multinationals or any other group.”

The Finance Ministry in March 2019 submitted to the Legislature a Tax Exemptions Bill for consideration and passage into law to regulate the application of tax and other exemptions, and to provide for related matters.

Argument for exemptions

On the other hand, the Chief Executive Officer of the Ghana Free Zones Authority, Michael Okyere Baafi, warned that any attempt to stiffen Ghana’s tax exemption laws could compel investors to leave the country.

“In Ghana, a free zone’s company is given a corporate tax exemption of 25% for ten years and after ten years you pay 15% in Ghana. In Cote d’Ivoire, they are given the same period but after that, they pay only 1% whereas Ghana is paying 15% after the regime.”

“In Cote d’Ivoire, they are given lands for free to set up their free zones somehow because they pay something very small, which we don’t do here. So looking at the exemption regime in Africa, I know Ghana’s free zones tax exemption regime is not the best as far as the content is concerned.”

Leave A Comment

Your email address will not be published.

You might also like
where to buy viagra buy generic 100mg viagra online
buy amoxicillin online can you buy amoxicillin over the counter
buy ivermectin online buy ivermectin for humans
viagra before and after photos how long does viagra last
buy viagra online where can i buy viagra