Did you know that Ghana has several tax incentives aimed at specific industries and classes of companies?
Also did you know that as someone doing business in Ghana, you are losing out if fail to take advantage of all the available tax incentives available to you?
Hence, always check the incentives available for your business and ensure that you take full advantage of them.
Tax and investment incentives come in all shapes and sizes – they may be industry specific, location specific, and product specific.
Consequently, as someone doing business in Ghana, there are a number of tax and investment incentives that you can take advantage of to lighten your tax burden. Ghana offers competitive investment incentives to investors, entrepreneurs and business people doing business in the country. These incentives include preferential rates of corporate tax, incentives for the employment of graduates and many more.
Let’s walk you through them with a bit more detail.
Preferential Tax Rates and Tax Holidays
Companies operating within certain sectors may benefit from tax holidays. These tax holidays are aimed at reducing the company’s overall corporate tax rate. Also, the tax incentives encourage investments in these areas. Sector specific incentives begins to apply from the date the company starts business and last for the period stated below ;
|Sector||Tax Holiday (Period in Years)||Corporate ncome Tax Rate|
|Real Estate (Certified Low Cost Housing)||5 Years||1%|
|Rural Banks||10 Years||1%|
|Cattle Ranching||10 Years||1%|
|Tree Cropping (e.g Coffee, Oil Palm, Shea-Butter and Coconut)||10 Years||1%|
|Livestock Excluding Cattle And Poultry||5 Years||1%|
|Fish Farming, Poultry And Cash Crops||5 Years||1%|
|Agro-Processing – Converting Fish, Livestock Into Edible Canned Products||5 Years||1%|
|Waste Processing (Including Plastics and Polythene)||7 Years||1%|
|Free Zones Enterprise/Developmen t||10 Years||1%|
Also, in the Agro-processing industry, after the initial 5-year tax holiday period where the company pays tax at the rate of one (1) per cent, agro-processing enterprises which use local agricultural raw materials as their main inputs would continue to enjoy reduced corporate tax rates according to location in which their manufacturing plants are located as follows:
|Location of Plant||Corporate Income tax Rate|
|Other Regional Capitals (except Northern, Upper East and Upper West Regional Capitals||15%|
|Outside regional capitals||10%|
|Northern Region (including Capital)||5%|
|Upper East Region (including Capital)||5%|
|Upper West Regions (including Capital)||5%|
Additional Location Incentives
In addition to the location incentives already discussed, there are additional location tax incentives in the form a reduced corporate income tax rate for companies engaged in the manufacturing. Manufacturing companies located in Accra and Tema pay tax at the rate of twenty five (25) percent – similar to that of other companies. However, should you locate your manufacturing plant outside Accra and Tema, you would enjoy location-specific incentives as indicated below;
|Location of Plant||Corporate Income tax Rate|
|All regional capitals except Accra and Tema||18.75%|
|Outside regional capitals||12.50%|
Farming and Agriculture
Similarly, there are attractive tax holidays to serve as incentives for enterprises engaged in farming or processing of agricultural produce. The tax holidays are designed to suit different types of farming activities e.g. cash crops, tree crops, fish farming, and crop, fish and livestock processing.
Farmers and companies cultivating tree crops such as coffee, oil palm, sheanut, rubber and coconut are entitled to a tax ten (10) year tax holiday from date of first harvest of their crops.
Farmers cultivating cash Crops such as cassava, yam, rice, pineapple, maize are entitled to a tax holiday of five (5) years from date of commencement of the farming enterprise.
The income a cocoa farmer earns from their cocoa is exempt from income tax.
The law permits farming losses to be carried forward for 5 years of assessment.
Exporters of Agricultural Products
Likewise, companies engaged in the export of non-traditional products such as horticultural products, processed and raw agricultural products grown in Ghana other than cocoa beans, wood products other than logs and limber, handicrafts and locally manufactured goods enjoy a concessionary tax rate of 8%.
The tax rate applies to income from the non-traditional exports only.
Ghanaians but look to make their businesses fully efficient and take advantage of all legal, tax and regulatory benefits that exist in the areas in which they choose to trade.
Author’s Profile: Audrey is a qualified lawyer, and the managing partner of AudreyGrey, a legal, tax and compliance firm in Accra. A member of the Ghana Bar Association, her areas of expertise are corporate and commercial law, taxation, labour and insolvency law. She has previously worked as an associate PricewaterhouseCoopers (Gh) Ltd and a law firm N Dowuona and Co in Accra. She is a member of and serves as the legal advisor to the Ghana Association of Restructuring and Insolvency Advisors (GARIA) where she assisted with drafting and policy formulation for the new Companies Act and Corporate Insolvency Bill. She is also an experienced Chartered Accountant and a member of the Association of Chartered Certified Accountants, ACCA (UK) and the Institute of Chartered Accountants, Ghana (ICAG). She is currently pursuing the Chartered Institute of Taxation (CIT) certification.
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