- local firms should enjoy the benefits given foreign ones
As government faces increased pressure to reduce the amount of tax exemptions which are costing it direly needed public revenues, it is also being reminded that ensuring a level playing field for investors is at least as important as the nature of the exemptions themselves.
Government’s desperation to attract multinationals into certain sectors of the economy has, to some extent disadvantaged local investors who are ignored with regards to tax exemptions in those same sectors.
A number of multinationals are offered tax holidays and rebates on corporate and indirect taxes and to some extent, on Pay as You Earn personal taxes for their employees as well, yet Ghanaian companies doing similar businesses are not granted any of those benefits.
A tax partner at the KPMG, Kofi Frempong-Kore, has suggested government need to group all multinationals and local investors, engaged in a particular business activity and sector into one category and extend the same tax benefits to them.
Speaking to the Goldstreet Business at KPMG’s forum on the 2019 budget in Accra, Frempong-Kore explained that local businesses should not be discriminated against, but must be given the same resources, incentives and allocations to operate just like the foreign companies.
Multinationals operating in the mining, oil marketing, manufacturing and in the trading sectors enjoy tax exemptions and other incentives which give them significant advantages over local companies in same businesses.
Frempong-Kore said, local companies would develop faster and be better positioned to export their products to other countries, particularly within the sub region, if they are offered similar benefits. Indeed, over 40% of Ghana’s non traditional exports are sold within the West African sub region and instructively, these comprise most of the country’s manufactured goods exports.
Most indigenous companies usually lack the requisite minimum start- up capital for businesses in certain sectors to qualify for tax benefits as granted by the Ghana Investment Promotion Centre and that adversely affects their chances of being offered tax exemptions.
But Frempong-Kore maintains that local companies who venture into priority sectors including mining, energy and manufacturing, must be given the needed push to enable them to be competitive on both domestic and international markets.
“Government must not favour one group above the other because it wants Foreign Direct Investment, which has always been the focus,” he said.
Meanwhile, the Ghana Investment Promotion Centre, (GIPC), at its Young Enterpreneurs Forum in July this year, said most local companies fail to register with the Centre to enable them enjoy allocated tax incentives.
At the forum, GIPC CEO, Mr Yofi Grant explained to the Goldstreet Business that, though it is not compulsory for indigenous companies to register with the Centre, opportunities for tax exemptions for local companies in the agriculture and manufacturing sectors have been left untapped because of their failure to register.
By Wisdom Jonny-Nuekpe