Business News of Friday, 13 February 2015
The Pharmaceutical Manufacturers Association of Ghana (PMAG) is calling on government to speed up its move to remove the new Value Added Tax (VAT) rate of 17.5% on pharmaceutical raw materials imported.
The tax was slapped on the sector last year. But according to the association the introduction of the new VAT rate has increased the cost of production.
The Pharmaceutical Manufacturers Association is currently involved in talks with the Ministry of Health and that of Finance to discuss the impact of the revised VAT law.
Drug producers currently pay VAT on 66 items out of about 200 different materials used for manufacturing drugs locally, and are later reimbursed by the Ghana Revenue Authority (GRA).
Speaking to Citi Business News at the sidelines of the second Africa Pharmaceutical Summit in Accra, Chairman and CEO of LaGray Chemical Company Dr. Pual A. Lartey said the pharmaceutical industry in the country is under serious strain from cheap, imported pharmaceutical products.
“Policy wise one thing that must be done to level the playing field is to remove the taxes that are on the importation of raw materials. The raw materials that are imported currently incur some taxes that’s the VAT and to the credit of the government they are trying to remove it, but they must speed up the process because it represents unfair competition to the imports from china and other countries whose products are heavily subsidized’.
Dr. Pual A. Lartey called on manufacturing companies to procure their raw materials locally saying it has several advantages because ‘the manufacturing companies are right here in Ghana with all the licensing agencies with regards to conforming to ISO standards are also here and which cut down time and reduces cost in procuring raw materials’.
He also pointed out that the manufacturing companies in the country provide only 30 percent of the total medicines used in the country which means there is room for improvements to strengthen the pharmaceutical industry.
“We only provide 30 percent of the medicines that are used in this country which means that 30 percent of the medicines provided in the country is quality assured but how about the 70 percent.”