The Ghana Chamber of Mines has raised red flags over the implementation of some aspects of the new Income Tax Act, 2015 (ACT 896).
According to the Chamber, government is bound to face difficulty as the implementation of such aspects of the law is not consistent with the consensus reached.
The President of the Ghana Chamber of Mines, Kwame Addo-Kufuor has therefore called on government to re-engage stakeholders on the matter as soon as possible.
He made the remarks at the 88th Annual General Meeting of the chamber on Friday.
“Though the new income tax act (Act 896) has the worthy objective of expanding its tax base and enhancing tax payments as well as revenue collection, the chamber has identified a number of concerns and raised them directly with the Ministry of Finance and we hope they will move swiftly to resolve these issues as it has huge implication on the industry,” he stated.
Two sections need re-engagement on implementation
The Chamber wants government to reconsider its implementation on the Waste Stripping Cost and Ring Fencing that it thinks the government must reconsider its implementation.
Sections 79(7) and 81(9) provide that “expenditure incurred in respect of mineral operation on waste removal, overburden stripping, and shaft sinking shall be capitalized in accordance with the General Accepted Accounting Principles (GAAP) and capital allowances granted over a five year period upon the commencement of commercial production.”
But the mining chamber is of the view that it is unfeasible to justify capital investment in the business if the treatment of waste stripping is capitalized.
Kwame Addo-Kufuor recounted that players in the mining industry continue to suffer severe cash flow limitations which had worsened by the price fall, as well as escalation of cost engendered by the hike in fuel cost and reduction in the supply of electricity in the country.
“The situation is not healthy for private sector development and only compounds the escalating cost of doing business in Ghana,” the Chamber president asserted.
Chamber concerned over VAT refund delays
The Chamber of Mines continues to express worry about the perennial delay in Value Added Tax (VAT) refund due the mining industry valued at GH¢250million as at the end of 2015.
The amount, yet to be refunded by the Ghana Revenue Authority, Citi Business News understands, is having adverse effects on cash flows for mining companies in the country, particularly in the face of a dip in price of commodity on the global market.
Commenting on the matter, Mr. Addo-Kufuor explained, “It is the industry’s expectation that government will expedite action on the measures to permanently address the perennial delay in the refund. The situation is not healthy for private enterprises and only compounds the escalating cost of doing business in the country.”
Government has on several occasions expressed its intention to implement legislation that will ensure VAT refund compliance.
The demand for the promulgation of a law as a condition for the formal implementation of the policy is a serious disincentive to mining firms.
By: Norvan Acqauh – Hayford/citibusinessnews.com/Ghana