Head of Tax Policy Unit at the Ministry of Finance, Daniel Nuer, has revealed that the new tax exemptions bill to be re-laid before Parliament seeks to support some five selected sectors of the economy.
Speaking at the Ghana Investment Promotion Centre’s (GIPC) Q2 CEOs’ Breakfast Meeting on Tuesday, May 25, Mr Nuer noted that the exemptions bill will see to the provision of exemptions and incentives to the government-selected sectors only.
“So some sectors have enjoyed exemptions and incentives for a long time, now it’s the turn of other sectors, it’s time to grow other industries with incentives and exemptions because we can’t give out all the revenue at the same time,” he stated
“In view of that, the Trade Ministry is looking at some sectors, particularly the pharmaceutical, automobile, housing and construction and others. In all there are about five or six sectors that the Ministry is looking at. Those sectors are government’s focus for now and the incentives must go to support these areas,” he added.
Speaking further, Mr Nuer averred the tax exemptions bill seeks to streamline the many exemption provisions scattered about in various legislations.
It is also to bring the country’s current tax regime in line with the law to ensure that tax exemption abuses are cut out from the current exemption regime.
“In the exemption review, there have been many abuses, people take the exemption and pass it on to a third party, there are those that enjoy it for a period and at the end of the period metamorphosis into something else and then want to enjoy the same exemption,” he stated.
“The current structure is going to bring the exemption regime in line with the law and make sure we cut out the abuses,” he added.
“We need to make exemptions efficient, equitable, and make sure that those that are supposed to have them have them, and that we take out the irrelevant ones and also put in sunset clauses, report on exemptions and also make it transparent,” Mr Nuer stated further.
The bill when approved by parliament is expected to harmonise the tax exemption and incentives regime in the country and help make it more efficient.
Tax exemptions are tax waivers given to local and foreign companies to encourage increased investment and more foreign direct investment in the economy. But there are concerns tax exemptions are depriving the nation of expected taxes for development.
It is estimated that Ghana lost $2.4 billion in 2011 alone as a result of tax exemptions. The figure grew to $2.5 billion in 2013 representing 5.2% of gross domestic product (GDP).
