Investment Incentives, Benefits and Guarantees

The Ghana Investment Promotion Centre Act, 1994, provides for automatic incentives and benefits as follows:

The following attract concessionary duty as follows:

1. Import duty is imposed on vehicles depending on the type of vehicle. All motor vehicles with cylinder capacity not exceeding 1900 attract an import duty rate of 5%. Motor vehicles of cylinder capacity exceeding 1900 but not exceeding 3000 attract an import duty of 10%. Other vehicles of cylinder capacity exceeding 3000 and those designed for traveling on snow, golf cars and similar vehicles attract an import duty of 20%.
2. Commercial vehicles for the transport of goods such as trucks, tippers and lorries attract a duty of 5%.
3. Commercial buses with seating capacity of above 30 passengers, workshop vans, breakdown vehicles, mobile showrooms, ambulances, hearse and motor bikes are exempted from the payment of import duty.
4. All the type of vehicles referred to in i, ii, iii above attract a Value Added Tax (VAT) rate of 12.5%, except ambulances, which are VAT-exempt.
5. Exemptions may be granted from payment of customs import duty and other related charges for any special equipment that is not zero-rated upon application to the GIPC.

Source: Customs, Excise & Preventive Services

 

Notes

“Non-Traditional Goods” means

• Horticultural productions.
• Processed and raw agricultural productions other than cocoa beans grown in Ghana.
• Wood products other than lumber and logs;
• Handcrafts;
• Locally manufactured goods.

i.   Tax Holiday (from start of operations)

a. Real Estate: The income of a company from a business of construction for sale or letting of residential premises is exempt for five (5) years from the date of commencement of operations.
b. Rural Banks: 10 years
c. Agriculture and agro-industry:

• Cocoa farmers and producers - income tax exempt
• Cattle ranching - 10 years
• Tree cropping (e.g. coffee, oil palm, shea butter, rubber and coconut) –  10 years
• Livestock excluding cattle and poultry - 5 years

• Fish farming, poultry and cash crops - 5 yearsAgro processing – the business of converting crops, fish or livestock produced in Ghana into edible canned or other packaged product other than in their raw state – 5 year

• Agro processing – the business of converting crops, fish or livestock produced in Ghana into edible canned or other packaged product other than in their raw state – 5 year

d.  Waste Processing (including plastics and polythene) – 7 years
e.  Free Zones Enterprise/Development - 10 years and 8% thereafter.

ii. Locational Incentives   (Tax Rebates)

a) Manufacturing industries located in regional capitals other than

• Accra and Tema     - 25 % rebate
• Elsewhere              - 50% rebate

b) After the initial 5-year tax holiday period, agro-processing enterprises, which use local agricultural raw materials as their main inputs, shall have corporate tax rates fixed according to their location as follows:

• Accra-Tema – 20%
• Other Regional Capitals – 10%
• Outside Regional Capitals – 0%
• All over Northern, Upper East, Upper West Regions – 0%         

Note: Unutilised capital allowances are carried forward indefinitely.

Tax losses are carried forward for five years and is lost if unutilised after the lapse of the fifth year. Only businesses involved in Manufacturing mainly for export, farming and mining have this right.

4. Investment Guarantees

The GIPC Act 478 provides guarantees to all enterprises, including free transferability through any authorized dealer bank in freely convertible currency of dividends or net profits attributable to the investment; payments in respect of loan servicing where a foreign loan has been obtained; remittance of proceeds (net of all taxes and other obligations) in the event of sale or liquidation of the enterprise or any interest attributable to the investment. Guarantees against expropriation of private investments provided under Act 478 are buttressed by the constitution.

Ghana is a signatory to the World Bank’s Multilateral Investment Guarantee Agency (MIGA) Convention. This Convention guarantees coverage (insurance) against non-commercial risks such as transfer restrictions, breach of contract, expropriation, war and civil disobedience.

Ghana also uses Double Taxation Agreements (DTA) to rationalize tax obligations of investors who come from global tax source jurisdictions with a view to saving the investors the incidence of double taxation. Ghana has to date signed and ratified DTAs with France and the United Kingdom. Another DTA has been signed and ratified with the Republic of Germany. It has also concluded (but yet to sign and ratify) same with Belgium, Italy and Yugoslavia.

Ghana offers commitments at the bilateral level to protect investors and their investments. To date, Ghana has concluded 21 Investment Promotion and Protection Agreements (IPPAs). Some of these have been ratified while others are still awaiting ratification. Another 19 are pending for conclusion. The countries with whom the agreements have been signed and ratified are:

         The countries with whom agreements have been signed but awaiting ratification are:

              The Republic of La Cote d’Ivoire               The Republic of Egypt

              The United States of America                     The Republic of France                    

              The Republic of                                           The Republic of Benin  

        The countries with agreements pending are:

              The Republic of Philippines                        The Republic of Mauritania     

              The Republic Singapore                            The Kingdom of Morocco

              The Republic of Togo                               The Republic of Finland

Source Ghana Investment Promotion Centre http://www.gipc.org.gh/home.aspx