Tax incentive reviews in Ghana

The companies operating in different jurisdiction around the world are subjected to varies level of taxes depending on the sector they are operating in, project location and whether listed on the  Stock exchange. Most businesses are liable to both either direct or indirect tax.
   In Ghana, for instance, the current government has made numerous promises regarding the current economy crisis through tax reform policy as per their 2016 manifesto as the way of reviving the economy and to attract investors toward the socio-economic development.

   Many research analysts have expressed their opinion about the potential revenues loss and implication of tax reduction and-and removal of nuisance tax from the existing tax systems as a way of broadening the tax base and to create enable the environment for business to function effectively.However, the business community needs to gain the better understanding of key change in Ghana tax system as a way of revamping their expenditure in order to take advantage of numerous tax incentive or credit.

•   Corporate Tax Incentive

  At the various stage in Ghana economic development, have corporate tax has been offer as a deliberate strategy ahead of other Africa countries in the competition for Foreign Direct Investment. Many business and organization will benefitted from these cut during the  Country economy recovery programme through structure adjustment program.

 The competition was found on the conviction that FDI is the only way to achieve rapid economic transformation.Corporate income tax in the mining sector for instant was cut down from 45 percent in 2008 to 25 percent in 2011 as well as list of exemption in the mining sector and expart employees tax incentive all inline with attempt to attract FDI.Several others incentive in agriculture and manufacturing sectors have all conspired to reduce effective tax rate.

•  Tax Holiday

   Tax holiday are differ from payment of corporate tax.Here, Companies are given time limit typically 5 to 15 year from the start of operation in Ghana where they are exempted from paying tax.This claim give dispensation to companies to recover investment cost before coming into paying tax.This policy helping the country to stay in competition for FDI as way of incubating new companies into maturity.The extend of the holiday is depend on what policy maker conceive as a reasonable period to fully nature the companies into maturity.Tax holiday in Ghana may also appear to be open ended as being witness in cocoa sector.

• Location Incentive

  Location investment is another type of incentive granted by the government of Ghana to multinational companies.Historically, investment in Ghanaian economy seemed to have been over   centred in the main cities especially Accra, kumasi and tema.The policy rational of business location incentive is  therefore is to encourage manufacturing and agro processing companies to locate beyond these three cities.It has been argue that this form of incentive policy has not yield the impact for which in what introduced because tax incentive are not sole determinant of FDI or multinational companies. Many investor prefer cities like Accra, Kumasi and Tamale  because of the availability of requisite skills, proximity to port facilities and relatively better access to water, electricity and banking services

• Transfer Pricing

  One of the monnest scheme use by multinational companies to shift profit from one country  to another is through  mispricing of good and services.Transfer pricing is an advance management accounting tools used to determine the price at which decentralised company transfer intermediate products and services from one sub-unit of the company to another.One of the main objective to use transfer pricing is to determine the amount of profit or loss that is attributed to the activities decentralise sub-unit of the company.

There many other form of tax incentive apart from those mention above such as capital allowance, carry forward loss and tax haven.Multinational company are good at finding way of  avoid ing paying tax that are technically not illegal, and persuading government to offer them tax deal as the price of their investment.Avast network of well paid lawyer, accountant and executive support them in circumventing the tax system that were created in order to provide funding for government service and strengthen democratic structure.

Although many study appreciate the government effort, especially in an recent time to streamline the tax system. it also stress the need for civil society organization(cso) to follow up on these intervention and related promise made by government.

• Conclusion

  The role of taxation in the developing financing cannot be  overemphasized.However the capacity of many developing counties to raise needed tax revenues to finance their development agenda can easily be constrained by generous tax incentive whose benefit have not been critically evaluated.