Business News of Saturday, 5 August 2017
Ghana over the years was losing about GHc1.5billion from tax exemption, the CEO of the Ghana Investment Promotion Centre, Yoofi Grant has disclosed.
This is because the policy was being implemented wrongfully, he explained.
According to him, the debilitating development led to the scrapping of the current tax exemption regime in the 2017 budget.
Mr. Grant made this known at a Breakfast meeting organised by the Centre dubbed; ‘Policy update—Ghana’s Tax Exemption Regime’ recently.
The meeting which was convened to update the business and the diplomatic communities respectively on the implementation of the new tax exemptions policy introduced in April 2017, also provided, participants an open platform to engage policy makers on their experience with the new regulations.
“My numbers stand to be corrected; but I think last year the budgeted amount of exemptions was about GH¢ 800 million but at the end of the day they realised that exemption had built up to GH¢ 2.4 billion.
“That means there must have been significant abuses in the system and they discovered that truly there were serious abuses in the system. The cost of not checking the abuses means that the good business end up paying relatively more than they are supposed to and that is a problem” bemoaned Mr. Grant.
The meeting was attended by the Director of Financial Investment Division at the Ministry of Finance, Samson Akligoh, and the Technical Advisor to the Commissioner General of the Ghana Revenue Authority (GRA), Christian Soti.
On their part, they gave further details on how the new tax policy will be executed on a practical level, and clarified particular sections and application of the regulation.
GIPC CEO’s Breakfast Meeting
Introduced in 2013, the quarterly series is held to engage the Ghanaian business community on government policy deliberations and decision-making, and to ensure adequate representation of their views and concerns.
In the first quarter of 2017, the event was rebranded to reflect the new direction and vision of the Centre. The first edition was the ‘Ghana on the Go Breakfast Meeting’ series convened to review the 2013 GIPC Act, its impact, and suggestions for improvement.
The outcomes of the event further underscored the need for continuous engagement with the private sector and other key stakeholders on current business challenges and opportunities to produce dynamic and innovative solutions aimed at ensuring that Ghana becomes the best place to do business in Africa.
The government, through its 2017 budget issued a directive for all companies which qualify for exemption to pay the duties upfront and then apply for a refund. The new rules were implemented in April 2017.
Exemption Process at GIPC
Giving a brief on the tax exemptions application process at the GIPC, the Chief Executive Officer Mr. Grant, said the Centre was mandated under section 26 of the GIPC Act to grant import duty and Value Added Tax (VAT) exemptions to qualified companies registered with the Centre.
“A typical approved strategic investment has incentives which include exemptions from the payment of import duty and VAT on plant machinery and equipment specifically for the project, construction materials specifically for the project, and on locally purchased construction materials and equipment required specifically for the project,” he added.
Mr. Grant, however, urged participants at the meeting not to hesitate, and share their experiences with the new tax regime to better inform government on how to make the business environment more convenient.