Posted: Friday 1st August 2014 at 13:00 pm

Why Rlg May Deserve A Tax Rebate/Concession

I have been following the ongoing seeming media war of words between the Member of Parliament for Obuasi, Hon Kwaku Kwarteng and communications firm, Rlg over an alleged attempt to grant the latter tax concession.

Having read both the MP’s statement and Rlg’s explanation, I am tempted to side by the company for a number of reasons. First of all, as a Ghanaian, I have no objection if tax exemption or rebate is grant to any company provided it is a Ghanaian company or it is based in Ghana and will therefore employ and create opportunities for Ghanaians.

The story of Rlg is known to many Africans; first as a retailer of mobile phones and devices, later as an assembler and ICT trainer and now a full manufacturer. In any case, Rlg did not get exemptions. There is a world of difference between tax EXEMPTIONS and tax CONCESSIONS/REBATES.

Secondly, at heart of the issue between the MP and the company is the definition of “manufacturing” or “manufacture”. Some legal definitions are to the effect that “any useful product made directly by human labour, or by the aid of machinery directed and controlled by human power, and either from raw materials, or from materials worked up into a new form.” My emphasis is on “on materials worked up into a new form”.

This may imply that some level of assembling of parts may amount to manufacturing. Indeed, in these days of outsourcing even established manufacturers of computers and vehicles virtually assemble parts manufactured elsewhere and by different manufacturers and
yet they themselves are regarded as manufacturers.

My third reason is that Tax exemption or rebate is granted by somebody or an institution, so Rlg cannot grant itself that concession. As we read from their response, the process has not even ended and that is why I find it interesting that the MP is already accusing the company of FRAUD. But my understanding too is that maybe the MP is convinced that none of the fine men and women at the Ghana Revenue Authority can be trusted.

If that is the case, it will be unfortunate. Point is that whatever concessions Rlg may have received was not based merely on representations made by Rlg but actions of the requisite regulatory entities vested with the power to review Rlg’s application.

The other point I note is that as found in the company’s response, the Ministry of Finance and Economic Planning at some point wrote that even though the company does qualify for exemption under Customs and Excise and Other Taxes Act, 2013, Act 863, they could take advantage of the chapter 98 of the Customs Harmonised Code that grants exemptions and concessions to manufacturers who are registered with the Commissioner of Customs and the Ghana Investment Promotion Authority; two basic things which the company subsequently did. And so I for instance wonder why they should not be granted the concession.

Lastly, on www.myjoyonline.com, I read a story exactly two years ago caption “Parliament advocates rlg plant expansion”. It was published on August 15, 2012, presumably, a day after the Parliamentary Select Committee on Trade and Industry paid working visit to Rlg. Parts of the story read; “Both the Committee’s Chairman and MP for Abokobi-Madina, Alhaji Amadu Sorogho, and the ranking member and MP for Subin, Ambassador Isaac Osei commended rlg for the giant step towards revolutionalising ICT on the continent in general and the sub-region as a whole.

They cited the impressive number of young people who have been beneficiaries of the ICT module under the NYEP, the ongoing ICT project for persons with disability across the country as well as other interventions which have them skill-oriented and productive.

They however challenged the company to expand to ensure many more youth are granted access to reduce the unemployment figures in the country.

The MPs said an urgent expansion of the company’s assembling plant will facilitate rlg’s readiness to “see beyond the borders of Ghana and increase substantially the production of the two flagship products, rlg laptops and the rlg phones”.

Parts of the story also read that “The Committee was at rlg to acquaint themselves with operations and learn of their challenges and prospects. They are expected to make formal recommendations to Parliament”.

Question is doesn’t transforming from an assembler to a manufacturer in order to do more and employ more amounts to growth and expansion? And could it be that the tax issue was part of the recommendations the committee made after their visit? Isn’t there a mechanism to encourage more local businesses to gain such access so that the economy will grow better? Unless this is politics, I am of the strongest opinion that they deserve it and many other Ghanaian companies deserve it too.

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