Some Civil Society Groups have commended government for introducing an improved Tax Exemptions Bill in Parliament for approval.

Government laid the Exemptions Bill 2021 in parliament on 16th November 2021, and it has since been referred to parliament’s Finance Committee for consideration and report back to the house. The bill is expected to harmonise the country’s tax exemption regime and ensure exemptions are given in a more efficient manner.

The groups in the statement commending government also made some suggestions for amendments. “The Tax Justice Coalition (TJC), the Parliamentary Network Africa (PN Africa), and the Ghana Anti-Corruption Coalition Ghana (GACC) working under the Legislative Advocacy on the Tax Exemptions’ Bill with support from Oxfam wish to commend the Government and particularly the Ministry of Finance for the sponsorship of the EXEMPTIONS BILL (2021),” the statement said.

“While we acknowledge the good work done on the Exemptions Bill (2021) which has significantly been enhanced since the 2019 Exemptions Bill; and after a careful reading of its sections, we are happy to commend the Ministry of Finance for a very good review of the previous Bill,” it added.

“The Exemptions Bill (2021) answered the majority of the concerns and issues that citizens and the Tax Justice fraternity have prayed for, however, the following are our additional inputs that can potentially further strengthen the Bill before being approved in Parliament,” the CSOs said.

The groups are among others recommending that “the Tax Exemptions Bill should include a requirement that the tax incentive regime is underpinned by clear, transparent and credible legal, technical and political processes to deter rent-seeking behaviours that grant tax breaks purely for private gains.”

“Transparency through beneficial ownership information should serve as an additional pre-requisite for the granting of exemptions as a safeguard measure. This will help to identify the actual beneficiaries of the exemptions, including those responsible and granting the exemptions to themselves,” the statement added.

Ghana provides a number of tax exemptions and incentives to encourage private investment and reduce the tax burden on certain companies operating in the country.

These exemptions must necessarily be approved by parliament first after the companies apply to the Finance Ministry.

Foreign companies have reportedly been the largest beneficiaries, but some local ones also do get it. Statistics indicate that the state loses an amount equivalent to 12.5% of all taxes collected annually, to tax exemptions given companies by government and Parliament.

The bill when approved is expected to harmonise the tax exemption and incentives regime in the country and help make it more efficient. An earlier attempt to get it approved in 2020 failed after the life span of the previous parliament expired before approval processes were concluded.

The groups are also recommending that the Bill should require that tax incentives are properly negotiated and not permit blanket provisions where all the tax handles are zero-rated irrespective of the policy implications.

“The government should be able to retain or exclude some specific taxes and levies such as the Ghana Education Trust Fund (GETFUND) levy and the National Health Insurance Levy (NHIL) from some of the exemptions. This will give the government some leverage and additional revenue,” the statement from the CSOs added.