There are fears that government’s decision to withdraw legitimately and lawfully granted tax exemptions from strategic investing companies in Ghana, could threaten the Government’s industrialization agenda if it is not reversed.
The worry is that the move could lead to a massive drop in the inflow of strategic investments into the country, and has the potential of scaring away existing strategic investors with the end result being a drop in economic activity and job creation.
Minister for Finance, Ken Ofori-Atta, has breached article 174(2) of the 1992 constitution, GIPC Act 2013 (865) as well as inter-country protocols on trade and investments through the withdrawal of tax exemptions from strategic investing companies in Ghana.
This was confirmed by Kweku Kwarteng, Deputy Minister Nominee for finance during his vetting in parliament Tuesday. Government through the Minister for Finance has written to withdraw legitimately and lawfully granted tax exemptions from strategic investing companies in Ghana – a move which completely shoots down the one district one factory policy which is aimed at bringing strategic investors into all districts of the country to create employment and economic development.
Many strategic investors have chosen Ghana ahead of its West African neighbours because of the tax exemption incentive through the Ghana investment promotion Act. 2013. According to Kwaku Kwarteng, who is also MP for Obuasi West, the move by government is intended to deal with irregularities in the exemptions regime.
Answering a question from minority leader Hon. Haruna Iddrisu as to why such a counter-productive measure is being used by government to scare away strategic investors, Mr. Kwarteng said he supports the measure because the ministry of finance has given a good reason for its decision.
“The Minister of Finance has responsibility to administer tax exemptions. There will be a refund to those beneficiaries. I know the implementation of that has started. In my humble opinion, so long as the value of the tax is removed from the beneficiaries, it constitutes a fair administration of the exemption especially as we have been told by the ministry of finance that it is intended to deal with irregularities of the exemptions regime’’, he said.
The Minority Leader, Haruna Iddrisu, however challenged the deputy finance minister nominee that the withdrawal of the tax exemptions from strategic investors by the ministry of finance is a breach of an Act of parliament which approved the tax exemptions to these strategic investing companies, and since the current tax variations by the ministry did not receive approval of parliament. Article 174 (2) of the constitution states ‘’Where an Act, enacted in accordance with clause (1) of this article, confers power of any person or authority to wave or vary a tax imposed by that Act, the exercise of the power of waiver or variation, in favour of any person or authority, shall be subject to the prior approval of parliament by resolution.”
The withdrawal of the tax exemptions by the Finance ministry has received a backlash from the business community especially foreign and local strategic investors who feel unfairly treated by the new government’s directive because of the sudden financial burden it has brought to their businesses.
The Ghana Investment Promotion Centre Act 2013, (865) “provides for the encouragement and promotion of investments in Ghana, to provide for the creation of an attractive incentive framework and a transparent, predictable and facilitating environment for investments in Ghana.”