A tax analyst, Abdallah Ali Nakyea has cast doubt at government’s ability to comply fully with suggestions that, it eliminates the tax exemption regime in the country’s tax laws.
The Deputy Managing Director of the IMF, Min Zhu on Tuesday reiterated the need for Ghana to eliminate its tax exemptions.
[contextly_sidebar id=”TOxgphGN3qtjQjtzrVQ89Ht7XxIbaO7A”]According to him, the move will enable government accrue more revenue and control the country’s fiscal deficit.
Under the current tax regime, some foreign companies operating in some regions of the country enjoy a tax free status while others enjoy for up to 10 years.
Also, businesses operating in free zone areas are entitled to 10 years tax holidays while agro-processing enterprises have an initial five year tax holiday period among others.
But in an interview with Citi Business News, Abdallah Nakyea maintained some economic conditions may not permit government to completely eliminate tax exemptions,
“The call on removal of exemption is one of the policies government is looking at but I don’t subscribe to removing all tax exemptions. Some will be more preventable because you know some of the tax exemptions are attached to certain agreements, loan agreements and grants that government go for; and then the country or the government giving you that grant or loan, requests for certain tax exemption on pay equipment and machinery to undertake a project. In that case, there is virtually a little or no leeway for government,”
“But if we have a situation where in even master funding agreement, it is understood and agreed by all parties that taxes and duties should be levied, then we can take it up from there.” Mr. Nakyea said.
Review current tax regimes
Meanwhile Ali Nakyea is urging government to monitor already existing tax exemptions in order to ensure it reaps the necessary benefits from their implementation. 9
“You want to create job and also to stem the influx in terms of the rural drift or stop Kayaye menace and a host of others. The question is that, how is that impacting on the economy? If these exemptions are lifted, the question I ask is how many jobs have so far been created? How has it been able to stem the rural urban drift? If it is not getting the impact and it is removed, then of course the little it may have achieved will be whistled away,” he stated.
Mr. Nakyea further observed, “So we first need to do an evaluation to find out what has been the impact of the exemptions that were granted, then we would be able to care but if it is removed, this is going to be the likely impact. But if with or without the exemption, nothing is happening, then of course the solution will not be with tax exemption but rather something else maybe peace and stability in that region.”
By: Pius Amihere Eduku/citifmonline.com/Ghana