The Tax Exemptions Bill 2022 was approved by Parliament to simplify the country's tax exemption framework. The Tax Exemption Bill (Act) is a tax law for the Revenue Administration Act, 2016 (Act 915)
The bill includes, among other things, tax breaks for domestic and international businesses to stimulate higher investment and foreign direct investment in the economy.The Tax Exemptions Bill, if signed by the President, will improve the Ministry of Finance's and Parliament's oversight over exemption administration. It will also provide a framework for monitoring, evaluation, and enforcement of tax exemptions in Ghana.Ghana has one of the lowest rates in the entire African continent with a sale tax rate of 13.5.
This bill does not come as a surprise because Ghana loses about 3375 million to various tax exemptions granted to businesses in the country. Thus, each year Ghana loses over 275,000 to tax waivers for the past 12 years. The Chairman of the Finance Committee, Mr. Kwaku Kwarteng, lamented that this is the biggest threat to Ghana's internally generated revenue strategy.
"Mr. Speaker, it is estimated that Ghana loses about 2.27 billion annually to tax exemptions and if Ghana will give more than half of our revenue base away by way of exemption, There is, therefore, an urgent need to pass this bill and halt this alarming trend .Finance Minister Ken Ofori Atta added, "It is true, as the Ranking Member mentioned, that some GH27 billion (33.75 million) has been lost to tax exemptions."
"This brings into focus the need for all of us to protect the public purse." That is an important social re-engineering for us, as we lose revenue on many fronts.“However, for this year, Ghana will likely make some savings of GH¢460 million(57.5 million) on tax exemptions,” he said
He explained that the rationale for this bill is to attract foreign direct investment, alleviate the tax burden on the vulnerable in society especially start-ups and also attract investors to specified sectors in supporting the development policies of the Government.
The Finance Minister reiterated that “The projected exemption for the year 2022 is expected to be lowered about 500 million(62.5 million) when the Bill is passed by Parliament “
Several stakeholders, notably the Association of Ghana Industries and the Ghana Union of Traders Associations, have long urged the government to implement steps to prevent the state from losing billions of cedis, particularly through tax exemptions.
Dr Alex Ampaabeng, a fiscal policy specialist with Oxfam Ghana, applauded the bill's approval.
“This is very welcoming news. We don’t have a way to streamline tax exemptions in Ghana. The exemptions which can be granted are part of strategic exemptions coming from the Executive arm. We can also have some negotiated also on behalf of the government by GIPC. So there are so many ways businesses coming to Ghana could go about it getting exemption granted and the Bill will help out with that. I hope this doesn’t become just one of those paper works. It should be a document that should be followed through. Just as we report on our debt situation, I hope that the Finance Minister will be reporting periodically on the exemptions that we have given out and be able to tell what we got back in return. We can also use the period to assess which exemptions have to be continued or modified or abolished. I hope next year by now, we should be in a better position to assess all these
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