Ghana is no longer comfortable with its tax exemption policy and that the policy is gradually becoming a menace to the country’s fiscal stability.
President Nana Akufo-Addo also admitted that the policy had also hampered revenue generation ambition.
The President hit at the policy in his State of the Nation Address in Accra.
The President said: “Revenue mobilization poses the biggest challenge in the management of our economy with the tax exemption policy, in particular, proving to be an Achilles heel and a growing menace to fiscal and revenue generation.”
In the last eight years, tax exemptions in respect of import duties, import VAT, import NHIL and domestic VAT have grown from GHc392 million in 2010 to GHc4.66 billion in 2018.
These figures do not include exemptions from payment of corporate and individual income taxes, concessions on tax rates, petroleum tax reliefs, customs tax exemptions enjoyed by diplomatic missions, and waiver of processing charges at the ports.
“If we continue at this rate, in less than sixteen years, half of Ghana’s revenue base will be given away as tax exemptions.” He said.
It is expected that government will churn out measures to deal with these challenges by introducing suitable policies that would disrupt the easy and comfortable arrangements that many companies, particularly the multinationals, have become accustomed to.
Last month, the Commissioner-General of the Ghana Revenue Authority (GRA), Mr. Emmanuel Kofi Nti told the Goldstreet Business that the authority would engage government over the review of some clauses of the tax exemption laws.
At GRA’s press interaction on January 31, 2019 in Accra, Mr. Nti called for a review or possible scrapping of tax waivers for multinationals and mining firms to complement revenue generation efforts.
“Government is looking at areas of exemptions in regard to some clauses and possible duration of the waivers. The GRA is looking at a situation where the law defines itself so that no one comes asking for exemptions that do not conform with the law,” he said.