Tax Incentives - Ghana Case Study

8/10/2019 Tax Incentives - Ghana Case Study

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Christian Aid - Ghana

CASE STUDY: GHANA

International Tax Justice Acade!

"#thNo$% & 'thDece(er) *#1+

Chi(e,e E,eiel

ce,eiel.christian-aid%or/

TA0 INCENTIES
mailto:[email protected]:[email protected]


2/19

Introduction

Tax incentives are concessions) 2ai$ers) 3ro$isionsand conditions ade a$aila(le to tax 3a!ers to ser$e

as a eans to reducin/ their tax lia(ilit!enacted into

law to boost investment into an economy.

Tax incentives are usually enacted into law and are

aimed at attracting foreign direct investment into an

economy as well as encouraging domestic investment in

certain specific sectors of the economy or locations of a

country

.

*


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"

1% Cor3orate Incoe Tax

Corporate income tax in the mining sector for instance

was cut from as high as 45% in 19! to "5% in "#11

$t the same time initial capital allowances were

increased from "5% to #% within the same period as

well as a long mining list of exemptions and other

expatriate employee tax incentives all in line with theattempt to attract investment thereby watering down tax

rates.

The most significant corporate tax ad&ustment has

been the reduction of the corporation tax rate of '".5% in"##4 to "5% in "##!


4/19

Cor3orate Incoe Tax Continue4%%

+

(n "#11 however the corporate income tax rate for

mining was revised upwards in response to civil societyadvocacy to '5%

)ther concessionary low rates such as the % for the

export of certain determined *uantities of manufactured

goods and agricultural products were broaden in scope tocover rural ban+ing, non-traditional exports particularly

processed agricultural products

$lso the hospitality industry currently en&oys a reduced

tax of "#% from a previous ""% and "5% in that order


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*% Tax Holida!

5

Companies are given time limits typically between 5 to

15 !earsfrom the start of their operations

Tree crop farmers /mango sheanuts cashew coffee oil palm rubber andcoconut0 en&oy 1#!ears tax exe3tionfrom the date of first harvest,

Cash crop farmers /groundnuts cassava yam rice pineapples maie

etc.0 en&oy 5 !ears tax exe3tionfrom the date of commencement of farming

Commercial processors of cocoa by-products en&oy 5 !earsincome tax

exemption from the date of start of operation

Cattle ranchers have 1# !earsfrom date of start of business2oultry and other livestoc+ including fish farmers also have 5 !earsfrom

the start of business

$gro-processing companies en&oy 5 !earsincome tax exemption from the

day of start of business.

2roducers of canned pac+aged or processed meat fish and crop

products en&oy " !earsexemptions from the date of commencement ofbusiness.

Companies registered under 3hana xport 2rocessing ones /6ree

ones0 also en&oy tax holidays from 1# years from the start of operation


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"% 6ocation Incenti$es

'

The 3hana (nvestment 2romotion Centre $ct 47

/now replaced by $ct !5 of "#1'0

8ith the exception of $ccra /capital0 and Tema /(ndustry City0 all otherregional capitals en&oy a tax rebate of "5%,

$ll other places in 3hana other than the ten /1#0 egional Capitals and

Tema en&oy a tax rebate of 5#%,

$lso for agro-processing the emphasis is on value addition in the cocoa

sub-sector where any processing with sub-standard cocoa beans cocoa hus+sand other cocoa wastes as the predominant raw material *ualifies for location

incentive in the following ways

- egional Capitals other than $ccra and Tema has a tax incentive rebate of

9#% of the applicable corporate rate /"5%0,

- $ny investment of the +ind in $ccra or Tema has a tax incentive rebate of

#% of the applicable corporate rate,

- )ther locations outside the regional capitals and the entire :orthern ;pper

8est and ast egions have a 1##% incentive rebate on the applicable tax

rate.


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+% Ca3ital allo2ance - Internal 8e$enue Act) *### 9Act 5*; $erall @roect o(ecti$e:

contribute to the effective

delivery of maternal health

services in Ghana and progress

towards the achievement of MG

5 targets by 20!5

A (eneiciar! o the tax

sensiti,ation trainin/% He is the

District Citi,ens =onitorin/

Coittees 9DC=Cs; ?ocal @oint%

Ke! outcoe: Counit! Health

Coitteeored 3riaril! to

onitor and deand

accounta(ilit! ro the District

Asse(l! 2ith re/ards to ho2

re$enues are ex3ended%

6ocal


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6EA8N: Action or 6ocal E3lo!ent)

Accounta(ilit! and 8esource =o(ilisatioN

17

>3en /o$ernance Trans3arenc! Accounta(ilit!

8e$enue Chart oard Counit!-(ased Health @lannin/ < Ser$ices 9CH@S;


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Ke! issues coin/ out

2ayment of tax on credit /e.g. cattle

owners in :orthern 3hana0. $n issue of

trust

Churches to start paying taxI

Citiens willing to pay taxes when able

to contribute and demand for

accountability


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Tax Incentives - Ghana Case Study

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