The Tax Exemptions Bill has been laid in Parliament on behalf of the Minister for Finance, Ken Ofori-Atta.
It was laid on November 16, 2021.
The bill, which seeks to streamline the tax exemption regime in the country, was first laid on the floor of parliament in 2019, but was not passed before the tenure of the 7th Parliament elapsed on 7th January 2021.
In August 2021, a group of civil society organisations; Tax Justice Coalition, Ghana (TJC), the Parliamentary Network Africa (PNAfrica), and the Ghana Anti-Corruption Coalition Ghana (GACC), under the umbrella of the Legislative Advocacy Programme with funding from OXFAM rekindled efforts to ensure that the right tax exemptions regime is instituted in the country.
Following, the first reading and presentation of the bill, the parliamentary process requires that the Finance Committee considers it and reports to the plenary before the second reading stage where the policy and principles of the bill are debated.
As part of the process of consideration, the finance committee is expected to take memoranda from the public.
Even before the announcement of memoranda from the public to the committee, a working group of experts, tax practitioners, and consultants under the Legislative Advocacy Programme have put together a set of proposals to strengthen the proposed tax regime.
Below are the recommendations from the group:
1. The Tax Exemptions Bill should include a requirement that the tax incentive regime be 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 prerequisite 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.
Our Proposed Amendment under General responsibility- Section 5 of the Bill:
(3) [Where required in (2), the beneficial owner (BO) in line with the Company’s Act 2019 (Act 992) shall be ascertained in the granting of such exemptions].
2. 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 exemptions.
This will give the Government some leverage and additional revenue. “The section 16 of the Bill should be amended or supported with Regulation to provide for this recommendation:”
Our Proposed Amendment under General Tax Incentives -section 16 of the Bill:
16. (3) [Unless for concessional, Government procurement and diplomatic exemptions, where customs duties and customs taxes are to be exempted or zero-rated, NHIS and GETFUND Levies shall stand and not be varied as prescribed by the tax provisions].
3. It is possible that omnibus exemptions to the President and the Presidency can easily be abused by third parties such as party supporters, friends and family. It is therefore necessary that the Bill is more specific on the President, and should provide that only one or specified officer(s) can apply for exemptions on behalf of the President or the Presidency. This requirement should equally apply to emergency and security operations, which also need serious checking and inspections.
Our Proposed Amendment-under Privileged Persons- Section 9 of the Bill:
(2) [Where an enactment provides for an exemption for the President, the exemption shall be for his personal use in his capacity as President].
(6) [In pursuance to this section, the President shall appoint in writing a person or an individual by name, address and other relevant identification to undertake all his transactions in each fiscal year or after].
4. Under Section 6 (2)- Responsibility of the Minister, and Section 10 (7)- Diplomats and diplomatic missions, the Bill proposes the following:
“The Ministry shall issue guidelines on the modalities for the vetting and granting of exemptions.”
We proposed: “The Ministry shall issue written guidelines published in the Ministry’s website on the modalities for the vetting and granting of exemptions.”
5. Under Religious Organisations – Section 12, the objective of this provision must be reconsidered. If the idea is that religious bodies should produce these items locally in five years’ time, it is perhaps not tenable because these items have associated religious myths or value depending on where they come from. For example, “Zamzam” from Mecca has a special mythical value and cannot be locally produced.
Hence, we propose that Section 12 (3) “The exemption under subsection (1) is applicable for up to five years after the entry into force of this Act” must be reconsidered in the light of its objective.
6. Under Section 19 (4)- Programmes and projects funded by grants. The Bill proposes the following
(4) “Where the items produced in Ghana are not suitable for the execution of a contract, an application shall be made to the Minister for approval.”
We propose that, Not Suitable be defined in the Bill or in the ensuing Regulations.
Finally, we believe the Government’s revenue mobilisation strategies through the digitisation programmes; TIN registration, Revenue Assurance and Compliance Enforcement (RACE) etc., are excellent but they would not result in the kind of revenues envisaged without managing and curtailing tax exemptions as a priority. Tax exemptions are assured revenues, and should be accounted for through a comprehensive management under an exemptions law.
Many expect that the bill that will be passed by the eighth parliament will incorporate most of the suggestions from civil society.