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INVESTMENT INCENTIVES, BENEFITS & GUARANTEES |
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In order to encourage and facilitate the operations of
private enterprise, the Ghana Investment Promotion Centre
Act, 1994 (Act 478), makes provision for the automatic
award of investment incentives and benefits without prior
approval. These incentives include:
- Customs import duty exemptions administered by the
Customs, Excise and Preventive Service (CEPS)
- Tax incentives administered by the Internal Revenue
Service (IRS)
Customs Import Duty Exemptions:
Under Act 478, plant, machinery, equipment and parts thereof
as contained in chapters 82,84,85 and 98 of the Customs
Harmonized Commodity and Tariff Code are zero-rated. These
are classified as follows:
- tools and implements;
- nuclear reactors, boilers, machinery and equipment;
appliances and parts thereof;
- electrical machinery and equipment and parts thereof;
sound recorders and reproducers, television image
and sound recorders and reproducers, parts and accessories
of such articles;
- goods admissible at concessionary duty rates when
imported by enterprises under the Act 478.
Provision has been made for any special equipment not
zero-rated to be granted exemption from customs import
duty and related charges upon application by the investor
to GIPC.
Income Tax
Incentives:
Tax incentive provided under the Income Tax Decree, 1975
(as amended) include:
1.
Tax Holiday (from start of operations)
- Real Estate: Rental income form residential and
commercial premises for the first 5 years after
construction. Income accruing to a company engaged
in the construction, sale or letting of residential
premises during the first 5 years of start-up of operations.
- Rural Banks: 10 years
- Agriculture and agro-industry: Cocoa farmers and
cocoa producers: income exempted; cattle
ranching; 10 years; tree crops (e.g. coffee, oil palm,
shea butter, rubber and coconut): 5 years
- Air and sea transport (non-resident): Income exempted.
The President may exempt any persons
or class of persons from all or any provision of the
Act subject to the approval of Parliament.
- Value addition to local raw materials: Manufacturing
enterprises that use local raw materials enjoy a 3
year Tax Holiday.
2. Capital Allowances
- Accelerated depreciation allowance is applicable
to all sectors except banking, finance, commerce,
insurance, mining and petroleum. Sectors that enjoy
accelerated depreciation allowance do not enjoy annual
allowances. The qualifying plant expenditure depreciation
rate is 50 percent per annum for 2 years; the qualifying
building expenditure depreciation rate is 20 percent
per annum for 5 years.
- Normal depreciation allowance applicable to banking,
finance, commerce, insurance, mining and petroleum
and is to be enjoyed once only in the year of assessment
for which the asset is first used by the owner of
the asset. Depreciation allowances for qualifying
expenditures are as follows: mining, 25%; plant 20%;
building 10%. The depreciation allowance for plantations
is 10%.
- The annual allowance rate applicable to banking,
finance, commerce and insurance after the enjoyment
of the depreciation allowance referred to in (b) above
is as follows: machinery 10%; plant 7.5%; furniture;
fixtures and fittings, 7.5%; buildings (excluding
residential property) 5% for mining and timer and
3% for other sectors; ships trawlers, ferry boats,
lighters and tug boats, barges, dredges and pontoons,
5%; aeroplanes, 10%; helicopters 7.5%; qualifying
mining and timber expenditure 15%.
d. The rates of annual allowances on plant, machinery,
etc. applicable to specific items at discretionary rates
are in the table below:
| Items |
Percentage |
| Amplifiers
(cinema) |
7.5 |
| Bicycles |
20.0 |
| Brick-making
machines |
5.0 |
| Motor
cars and trailers |
15.0 |
| Carts |
5.0 |
| Cash
registers |
7.5 |
| Cinema
projectors |
10.0 |
| Electric
dynamos, motors and general plant |
12.5 |
| Engine
boilers and shafting (sawmills and printing) |
7.5 |
| Engines
- diesel |
10.0 |
| Engines
- Internal combustion (stationary) |
10.0 |
| Fixtures
(general) |
7.5 |
| Lorries |
20.0 |
| Machinery
(general) |
10.0 |
| Oil
storage tanks (bolted) |
7.5 |
| Oil
pipelines and fittings |
7.5 |
| Riveted
and welded |
7.5 |
| Petrol
pumps (fixed, portable or underground) |
12.5 |
| Photo-finish
(racing) |
10.0 |
| Printing
and binding machines |
7.5 |
| Printing
type |
12.5 |
| Railway
wagons |
10.0 |
| Refrigeration
plant |
12.5 |
| Seating
(cinema) |
7.5 |
| Soap
Manufacture (filling machines) |
12.5 |
| Soap
manufacture (pressing machines) |
7.5 |
| Soap
manufacture (stills) |
12.5 |
| Textile
design rollers |
10.0 |
| Turnstiles
(cinema) |
10.0 |
| Typewriting
and calculating machines |
15.0 |
| Diesel
locomotives |
12.5 |
| Motor
vans |
20.0 |
Note: Tools and implements: no capital allowance, but
is allowed on replacement basis.
Where an item is not mentioned in (d) the rates under
(a), (b) and (c) will apply.
3.
Locational Incentives (tax rebate):
Manufacturing industries locate in regional capital other
than Accra and Tema will enjoy a 25% rebate. All other
manufacturing industries located outside regional capitals
shall enjoy a 50% rebate.
4.
Corporate Tax Rates:
The tax rate in all sectors is 35% except for income from
non-traditional exports (8%) and hotels (25%.
5. Exemption from Income Tax:
An exemption will apply for the provision of accommodation
for employees on farms, as well as building, timber, mining
and construction sites.
6.
Loss Carry-over
All sectors are allowed 5 years for loss carry-over, except
for insurance business, which is unlimited.
7.
Exemption from the Minimum Chargeable Income Tax:
There is an exemption form the minimum chargeable income
of 5% of turnover during the first 5 years.
8.
Capital Expenditure for research and development (R&D):
By a manufacturing company in Ghana that is approved by
the Minister of Trade and Industry is fully
deductible (section 4 (dd).
9.
Withholding Tax:
Withholding tax rebates are as follows: dividends 10%;
royalties, management and technology transfer fees 15%;
interest 10%.
Immigrant
Quota:
Under Act 478, enterprises benefit from the grant of an
automatic maximum immigrant quota, depending on the enterprises'
paid-up capital.
Investment
Guarantees:
Act 478 provides guarantees to all enterprises, 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. |
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