Ghana offers 10-year tax break to automakers

Image from Bloomberg

Ghana will provide automakers with local factories with up to 10 years of tax breaks in an attempt to attract international automakers such as Volkswagen AG and Nissan Motor Co.

Volkswagen and Nissan both agreed last year to set up auto-assembly plants if Ghana signed off on an official incentive plan, while Renault SA said in January it would consider a similar move. In March, Toyota Motor Corp. and Suzuki Motor Corp. announced a joint venture to produce vehicles in the nation.

Ghana's move to lure carmakers follows South Africa, which has attracted seven manufacturers including Renault, Nissan and Toyota with tax incentives. That's produced one of the bright spots of an otherwise moribund economy, accounting for about 7% of GDP.

The full 10-year tax break will only apply to companies building whole vehicles in Ghana, though a five year holiday will be available for partial manufacturing, Trade Minister Alan Kyerematen said in a presentation.

In addition, according to Alan Kyerematen, import tariffs on new and used cars will be raised from 5% -20% to 35% to encourage the purchase of locally manufactured cars while prohibiting the import of cars over 10 years.

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