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16 new tax reforms in Ghana

photo: By Fredrick ASIAMAH

The effects of the implementation of the 2017 Budget and Economic Policy will be felt by consumers and businesses in a few weeks, because they will stop paying or pay less of some taxes compared to 2016.

In spite of the reforms, government does not expect tax revenues to fall in the ensuing year. Total tax revenue is estimated at GH¢34.4 billion, representing 6.9 percent of GDP. Of this amount, non-petroleum tax revenue is estimated to grow by 32.4 percent and this amounts to GH¢33.8 billion equivalent to 16.9 percent of non-oil GDP,” the Minister for Finance indicated.

Tax Incentives

According to the Minister, a number of tax measures have been introduced in recent years in an attempt to deal with revenue shortfalls. “Some have proven to be nuisance taxes. They have low revenue yielding potential and at the same time impose significant burden on the private sector and on the average Ghanaian.”

Consequently, Government has decided to reenergize the private sector by way of reviewing these taxes to provide relief for businesses.

Specifically, Mr. Ofori-Atta named 14 taxes that would be removed, reduced or replaced in the short to medium term. Those to be abolished are the 1 percent Special Import Levy; the 17.5 percent VAT/NHIL on financial services; the 17.5 percent VAT/NHIL on selected imported medicines, that are not produced locally; the 17.5 percent VAT/NHIL on domestic airline tickets; the 5 percent VAT/NHIL on Real Estate sales; excise duty on petroleum; duty on the importation of spare parts; and levies imposed on kayayei (head porters) by local authorities.

Government will also reduce the special petroleum tax rate from 17.5 percent to 15 percent; the National Electrification Scheme Levy from 5 percent to 3 percent; and the Public Lighting Levy from 5 percent to 2 percent.

Additionally, government will replace the 17.5 VAT/NHIL rate with a flat rate of 3 percent for traders; and initiate steps to remove import duties on raw materials and machinery for production within the context of the ECOWAS Common External Tariff (CET) Protocol.

Finally, government will exempt from taxation, the gains from realization of securities listed on the Ghana Stock Exchange or publicly held securities approved by the Securities and Exchange Commission (SEC), as well as, implement tax credits and other incentives for businesses that hire young graduates.


In an interview with Business Day Ghana, Mr. Bernard Anaba, a member of the Ghana Tax Justice Coalition, said “Generally, in terms of taxation, the budget looks positive.”

He said the announcement of the government’s intention to reduce taxes as well as close revenue leakages are important steps towards reducing the tax burden on individuals and businesses.

“These are key areas that we have been campaigning on,” he said, pointing to the works of the Ghana Tax Justice Coalition, which is the national chapter of the Tax Justice Network-Africa (TJN-A).

He measured that the consumers would feel the lager impact because most of the cuts relate to consumption taxes - the Valued Added Tax(VAT).

He said that removing the consumption taxes would impact on the prices of goods and services. Thus, the consumers will be benefited.

“All the VATs come to the individual consumers but businesses were complaining because it makes their prices high. So the cuts are a relief to all of us,” Mr. Anaba said.

“But we can only measure what actually benefits individuals after the passage of time” when the appropriation bill is passed and the relevant laws are amended.
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