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China-Africa Trade Information Service
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The government of Ghana has recently revealed that they will launch a partial tax exemption policy to eliminate taxes from some multinational companies or mining firms to attract foreign investment.
Discussions between finance ministry and Ghana Revenue Authority chieftains have intensified recently, ahead of the unveiling of the 2019 budget later this week and this has put some of the biggest beneficiaries of tax exemptions on edge.
In 2017 alone, import exemptions granted to foreign companies and other institutions rose by 15.5 percent to GHS2.6 billion.
The rise in exemptions from GHS2.3 billion in 2016 to the 2017 figure reveals the country’s inability to control the amount of tax freebies granted to foreign firms in spite of the government’s stated determination to curb them. The amount lost to import exemptions was about 8.1 percent of 2017 tax revenue, which was at GHS32.2 billion.
Studies by the World Bank indicate tax exemptions granted are estimated to be about five percent of Gross Domestic Product (GDP).
However, despite its desire for significantly bigger tax revenues, government is circumspect about cancelling tax exemptions wholesale because they are perceived as a major factor in attracting major foreign corporations who have the luxury of being able to choose which countries to invest in from a wide range nationwide.
This notwithstanding, an Economist at the Institute for Fiscal Studies (IFS), Leslie Dwight Mensah has advised that to ensure the country accrues the benefits anticipated for granting tax exemptions, there is the need for a much stronger monitoring regime.