Govt reviews tax exemption regime

The government has started a review of all the tax exemption regimes and incentive structures to ensure that the country gets the right value for such packages granted to businesses, the Head of the Tax Policy Unit at the Ministry of Finance (MoF), Mr Daniel Nuer, has said.

He explained that the review, which focused on areas such as exemptions for industries, strategic investors and imports, was to help the government identify the necessary adjustments that needed to be adopted into the Tax Exemption Bill currently before Parliament.

“We are reviewing all the incentive structures to remove those that have outlived their usefulness in the tax regime,” Mr Nuer said at the second quarter 2021 CEO’s Breakfast Meeting organised by the Ghana Investment Promotion Centre (GIPC) in Accra yesterday.

Breakfast meeting

The meeting was on the theme: “Understanding Ghana’s taxes and exemptions regime towards increasing investor confidence in the business environment”.

It created the platform for both local and foreign investors, captains of industries, members of the business community, as well as policy makers, to discuss and understand issues related to Ghana’s taxes and exemptions regime.

Some of personalities at the meeting were the Chief Executive Officer (CEO) of the GIPC, Mr Yofi Grant; the Head of Competence Centre Private Sector Development and Projects at the Delegation of German Industry and Commerce in Ghana (AHK Ghana), Ms Stefanie Simon; the Head of Research, Monitoring and Evaluation at the Ghana Shippers Authority (GSA), Mr Emmanuel Arku; the Principal Revenue Officer of the Ghana Revenue Authority (GRA), Mr Lawrence Hotsonyame, and the Manager of Project Evaluation at the Petroleum Commission, Mr Ebenezer Harmah.

Review process

As part of the review process, Mr Nuer said, the Ministry of Trade and Industry (MoTI) was expected to furnish the Ministry of Finance with some selected strategic sectors to benefit from the new regime.

“Some of the strategic sectors being considered to benefit from the new regime are automobile, pharmaceuticals and housing and construction,” he said.

He noted that the bill would provide an appropriate and well-structured framework for Ghana’s exemption regime.

“Although we are not done with the review, the relay of the bill to Parliament will feature some few adjustments, including exemptions for industry, strategic investors and imports,” Mr Nuer added.

Abuses in the system while the GIPC recognised the importance of tax exemptions to businesses, it also realised that there had been abuse in the system, which needed to be corrected.

“This understanding provided by the MoF, therefore, brings clarity to the misconceptions people have about the country’s tax exemption regime. For us at the GIPC, this has become a pertinent issue because our AfCFTA Care Unit is inundated with issues related to tax exemptions by business people,” he said.

Mr Grant said while the centre recognised the importance of exemptions, it also noticed that there had been a lot of abuse in the system, even though it was not more than five per cent.

Shift to tax expenditure

The GIPC CEO indicated that through tax reforms and a new direction in tax administration, the government had been able to move from tax exemptions to tax expenditure.

That, he said, enabled it to use taxes in more constructive ways for the benefit of all.

“I believe and I am sure most of the businesses have expressed the same belief that this new regime will work better than the previous one. We do recognise that most investors want some form of incentive, but global literature will tell you that it is not incentives that bring investors to a country but rather the market,” he said.

Support one another

Ms Simon urged the business community in Ghana to support one another in order to help improve the country’s business environment.

“As businesses, we do not want to depend on government agencies alone; we think we can support one another in the areas of data and information sharing to create a better environment for all,” she added.