Ghana drops 4-places in ease of doing business
Ghana’s ranking as declined in the ease of doing business 2020 report, the latest edition of the annual World Bank report.
The World Bank Ease of Doing Business, which is a forward-looking report, in 2019 ranked Ghana at 114 with a score of 60.4 and in 2020, the country was ranked 118 with a score of 60.
This has been attributed to the introduction of the five percent straight levy in 2018, comprising the Ghana Education Trust Fund (GETFund) and the National Health Insurance Levy (NHIL) straight levies at 2.5% rate each.
According to the World Bank, the conversion made paying taxes more complicated and more costly as they became a cost to businesses.
The Association of Ghana industries (AGI) has described the straight levy regime as a disincentive to local manufacturing. Before the straight levy came into force, manufacturers recovered 17.5 percent input and 17.5 percent output Standard Rate VAT fully.
However, under the new regime, manufacturers can only claim 12.5 percent, leaving five percent as an additional cost burden, likely to be passed on to consumers. Instructively however, the three percent VAT Flat Rate scheme (VFRS) operators such as retailers/traders have been exempted from this five percent tax burden under this new regime.
In effect therefore, manufacturers have become less competitive.
It has thus become cheaper to import and sell to make profits than to manufacture the same commodity locally, as the tax burden translates into additional cost to the tune of millions of Cedis to many local manufacturers.
On the other hand, the country made getting electricity faster by improving the review process and increasing the availability of equipment for new electricity connections.
Ease of Doing Business 2020
Doing Business 2020 is a World Bank Group flagship publication, and it is the 17th in a series of annual studies which provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level.
Doing Business 2020 continues to show a steady convergence between developing and developed economies, especially in the area of business incorporation.