Ghana’s Parliament to amend revenue law to create an even tax regime

Ghana’s Parliament is to adopt a parliamentary committee report that seeks to change portions of the Internal Revenue Act, 2000 to impose a Capital Gain Tax on petroleum operations, to amend the withholding tax rates for non-residents and to amend the tax rates for free zone enterprises at the end of their ten years tax holiday.

A Finance Committee report says the bill provides for income derived from the supply of goods and services by free zone enterprises to attract the same tax rates as their counterparts operating in the domestic market.

It is expected that this will prevent the current undue situation, where goods and services produced by free zone enterprises gain unfair advantage over goods produced by enterprises operating outside the free zone enclave. The expectation is also that it will eventually strengthen local industries and make them more competitive.

This is in line with the 2014 budget, which seeks to create an even tax regime and improve revenue generation.

The observation is that the extension of the Capital Gains tax to cover petroleum operations is long overdue.

Meanwhile, Parliament is to work on a bill to amend the Customs and Excise (Petroleum Taxes and Petroleum Related Levies) Act, to change the rate of duty imposed on selected petroleum products from specific rates to ad valorem excise duty and to provide for the Road Levy.

The 2014 budget mentioned some policy measures to improve revenue generation. Among these measures is the proposal to change the rate of duty imposed on selected petroleum products from specific rates to ad valorem excise duty rate.

A Finance Committee report said with the proposed change from specific to ad valorem, there will be a change in price of a gallon of premium product from GH¢9.540 to GH¢9.8970.

For gas oil, this will result in price change from GH¢9.9900 per gallon to GH¢10.2483 per gallon. The rationale for shifting from specific to ad valorem will ensure an automatic adjustment of tax, whenever prices change.

The provision of new rates for the road levy is also expected to generate the needed funds for regular maintenance of roads across the country.

By Eunice Menka