Parliament has applauded the government’s new tax relief arrangement in the Exemptions Act 2022 (Act 1083), which allows the State to convert taxes into equity.
The legislature approved a US$38.66 million tax waiver for Import Duties, Import VAT, Import NHIL, Import GETFund Levy, Exim Levy, Special Import Levy, and other fiscal reliefs on materials and equipment imported by the Ghana Bauxite Company (GBC) as a strategic investor.
According to the Finance Committee report on the tax reliefs, GBC, as a strategic partner, has agreed to grant the State a commensurate equity in the company’s project.
During the approval of the tax reliefs, Minority Leader Ato Forson indicated that converting the US$38.6 million concession into equity would increase the government of Ghana’s stake in GBC from 20% to 23.56%.
He said, “This is the model I have always advocated for, because tax exemptions should not be free. For the first time, the Minister has complied with the PFM Act. Going forward, make sure that every tax exemption you waive for a company comes with equity. If it comes with equity, we will be compelled to support it. Otherwise, it is like freebies, but this is not one of them. I commend the Ministry for complying with the tax exemption law and converting taxes to equity.”
The Majority Leader, Alexander Kwamina Afenyo-Markin, backed the tax relief arrangement and urged the company to focus on Corporate Social Responsibility and employ more locals.
“Today, if the right thing has been done, and fortunately it is also owned by a Ghanaian, it is in the right direction. We encourage the company to focus on Corporate Social Responsibility for the people in the area. With the exemptions they are enjoying and the profits, they should not just focus on profits but also invest and employ more Ghanaians.”
The negotiated tax exemption for strategic investment with GBC allows the State to take an equity stake in the company equivalent to the amount of taxes and duties exempted by the State.
The report notes that the benefits of GBC’s project are substantial, with the expansion expected to create more job opportunities and stimulate local businesses.
