In order to encourage and facilitate the operations of private enterprise, the Ghana Investment Promotion Center Act, 865, 2013, 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 Pperations)
- 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%.
- The rates of annual allowances on plant, machinery, etc. applicable to specific items at discretionary rates are in the table below:
|Motor cars and trailers||15.0|
|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|
|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|
|Printing and binding machines||7.5|
|Soap Manufacture (filling machines)||12.5|
|Soap manufacture (pressing machines)||7.5|
|Soap manufacture (stills)||12.5|
|Textile design rollers||10.0|
|Typewriting and calculating machines||15.0|
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%.
Under Act 478, enterprises benefit from the grant of an automatic maximum immigrant quota, depending on the enterprises' paid-up capital.
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.