Some tax analysts have expressed strong reservations against assertions that government’s plan to cut down on its tax exemptions, will affect Foreign Direct Investments (FDIs) to Ghana.
[contextly_sidebar id=”9AYMWNnBmzek12t3yhBHYkda7NM26Aj1″]In the tax analysts’ view, the move should rather reduce the excessive losses due to the apparent abuse of some tax reliefs in the country.
“This will not affect FDIs because as at now, a manufacturing company operating outside Accra and Tema is entitled to pay corporate tax of 18.75 percent compared to the normal 25 percent. But if you’re even outside some outskirts of town, you are entitled to a corporate tax of 12.5 percent. But how many manufacturing companies are willing to take up such opportunities,” Tax Consultant, William Demetia told Citi Business News.
Mr. Demetia also argued that since manufacturers are influenced by factors other than the tax reliefs, it will be prudent for the government to be measured in granting tax reliefs to businesses.
“Even with the tax incentives of halving the tax obligations, people are not investing in some areas. It presupposes that there are other economic factors that are taken into consideration before investing in a particular area. These include reliability of power, ready market and closeness to raw materials.”
The government, in the 2017 budget disclosed that it will review exemptions currently granted to MMDAs, senior officials, contractors and suppliers, among others.
The move according to the Finance Minister, Ken Ofori Atta is aimed at ‘tackling the systemic abuse in the exemptions regime.’
Per the review, beneficiary companies will rather be made to comply with all initial tax obligations and request for refunds after satisfying all obligatory payments under the country’s tax laws.
In lauding the measure outlined by the government, William Demetia, further told Citi Business News the new practice will also rake in enough revenue to meet government’s critical expenditure.
“If all these taxes was to be payable, government would have enough revenue to pursue some of the things that it had wanted to execute,”
“The Minister has to set up an enforcement mechanism such that he can regulate the granting of tax exemptions in the country.”
By: Pius Amihere Eduku/citibusinessnews.com/Ghana