The total tax waivers granted to companies and import tax exemptions over the past seven years amounted to GH₵30.7 billion.
It consists of GH₵11.7 billion in tax waivers for companies and GH₵19 billion in import tax exemptions.
Finance Minister Dr. Mohammed Amin Adam disclosed this to Parliament.
These exemptions pose significant threats to Ghana’s domestic revenue mobilization strategy.
Analysts have questioned the basis of many of the exemptions granted.
GH₵11.7bn tax waivers granted companies
The tax waivers granted to companies between 2017 and 2023 are as follows: $138.82 million in 2017, $586.28 million in 2018, $284.63 million in 2019, $501.34 million in 2020, $165.43 million in 2021, $194.67 million in 2022, and $117.71 million in 2023.
These figures total $1.988 billion, equivalent to GH₵11.7 billion when converted using the exchange rates for each respective year.
GH₵19bn import tax exemptions
Regarding import tax exemptions, the total for the same period reached GH₵19 billion.
The annual breakdown is GH₵3.08 billion in 2017, GH₵2.25 billion in 2018, GH₵2.48 billion in 2019, GH₵1.71 billion in 2020, GH₵2.46 billion in 2021, GH₵3.47 billion in 2022, and GH₵3.55 billion in 2023.
A previous report indicated that Ghana lost approximately GH₵27 billion to tax exemptions granted to businesses between 2008 and 2020.
Exemptions in statutory legislation
These tax exemptions were embedded in statutory legislation and included income tax exemptions, tax holidays, rebates and concessions, import exemptions, value-added tax reliefs, and excise tax.
Rationale for exemptions
The rationale for these exemptions was to attract foreign direct investment, alleviate the tax burden on vulnerable groups, encourage business start-ups, attract investment into specific sectors or locations, and support the government’s development agenda.
Tax Exemptions Bill passed
In July 2022, Parliament passed the Tax Exemptions Bill, 2022, to establish a comprehensive tax exemption regime in the country.
The Bill aims to set clear eligibility criteria for exemptions, provide for their administration, and ensure the monitoring, evaluation, reporting, and enforcement of exemptions.
This is intended to strengthen the monitoring role of the Ministry of Finance and Parliament in managing exemptions and to curtail the abuse of the existing exemption regime.
Over the past decade, tax exemptions related to Import Duty, Import Value Added Tax (VAT), Import National Health Insurance Levy, Import Ghana Education Trust Fund, Export-Import Levy, Special Import Levy, and Domestic Value Added Tax have grown, despite efforts to control this increase.
Under the Tax Exemption Act, an exemption is defined as a waiver or variation of a tax, levy, fee, or charge provided for under an enactment, or a variation of the timing of the payment, which results in a reduction in the effective liability of the payer.
However, the Commissioner-General retains the power to remit assessed tax or extend the payment date.
