Gov’t considering shares acquisition instead of tax exemptions
Government has said it will soon begin the scrapping of tax exemptions which are considered counterproductive and offers no benefit to various sectors of the economy.
As an alternative, the government will rather consider acquisition of shares in large investments particularly in the private sector through negotiations for companies that wants to operate beyond the normal duration of the current exemption regime.
Currently, the Ghana Investment Promotion Centre grants a 5-year tax exemption in the real estate sector, livestock farming, agro-processing, seven years for waste processing companies and 10 years for rural banks, cattle ranching, tree planting and free zones enterprises.
Though exemptions are primarily granted to businesses coming into the country through the Ghana Free Zones Authority (GFZA), the Ghana Investment Promotion Council (GIPC), diplomatic and development institutions, Deputy Minister of Finance, Kweku Kwarteng, speaking at the second quarter GIPC-hosted CEOs breakfast meeting said government will consider the possibility of acquiring shares in those companies that wants to go beyond the duration of their exemptions.
Contributions have begun to the ongoing conversation as to whether business owners will be willing to offer 20 to 30% of shares to government should such entities request for exemptions outside the normal duration of the law.
“Government will later give the stocks acquired to the investor for a fee when that business becomes profitable for and the company wants have the shares back” the Minister said.
Though it is a normal procedure for large scale businesses and investors to apply for exemptions in some specific areas of business, government noted that such exclusions from tax, may not necessarily be granted upon application though such companies may have invested up to a certain threshold.
“We should not grant exemptions to investors because they have invested beyond a certain threshold. We are targeting specific sectors where growth is needed so we can control some shares in the companies that wants to invest in those areas. We are more interested in that instead of exemptions.” Mr Kwarteng disclosed.
He indicated that government intends to target specific sectors of the economy and that businesses wanting to be involved in the ‘One district One Factory’ programme could take advantage of such initiative.
A Partner at PricewaterhouseCoopers Abeiku Gyan-Quansah has asked Parliament to pass the tax exemption bill which was laid before the house to streamline tax exemptions.
He said that the tax exemption bill before the Finance Committee in parliament, will help minimize its abuse should the bill be passed into act.