 INVESTMENT INCENTIVES, BENEFITS AND GUARANTEES |
 The GIPC Act, 1994 (Act 478) |
The Ghana Investment Promotion Centre Act, 1994, provides for automatic incentives and benefits as follows: (See GIPC Incentive brochure for full details)
| 1. Customs Import Duty Exemptions |
There is duty exemption for plant, machinery, equipment and parts imported for investment purposes as contained in chapters 82, 84, 85 and 98 of the Customs Harmonized Commodity and Tariff Code.
Tax Rate 0
The following however attract concessionary duty.
| Heading No | Tariff Description | | 82.08 | Knives and Cutting Blades | | 84.71 | Automatic Data Processing Machines and units thereof | | 85.01 | Electric Motors and Generators (Excluding Generating Sets) | | 85.02 | Electric Generating Sets and Rotary Converters (less than 375 kVA) | | 98.07 and 98.08 | Air-conditioners; Furnishing including Carpets, Bedding and Fixtures; Fans and Radio Sets; Refrigerators/Deep Freezers; Television Sets; Public Address Systems; and, Crockery |
Exemptions may be granted from customs import duty and other related charges for any special equipment that is not zero-rated upon application to the GIPC.
| 2 Income Tax Incentives |
A. Corporate Tax Rate - 35% in all sectors except:
i. income from non-traditional export 8%
ii Hotels 25%
B. Exemptions
i. Tax Holiday (from start of operations)
Real Estate: rental income from residential and commercial premises - first 5 years after construction.
Rural Banks: 10 years
Agriculture and agro-industry:
· cocoa farmers and producers - income tax exempted
· cattle ranching - 10 years exemption
· tree cropping (e.g. coffee, oil palm, sheabutter, rubber and coconut) 10 years exemption
· livestock excluding cattle and poultry - 5 years exemption
· fish farming, poultry and cash crops - 5 years exemption
· manufacturing company, using predominantly local raw materials processing crops, fish or livestock - 3 years exemption
Manufacturing enterprises which add substantial value to local raw materials - first 3 years exemption.
Air and Sea transport (non-resident) - income tax exempted.
Free Zones Enterprise/Development - 10 years exemption and 8% corporate tax thereafter.
ii. Locational Incentives (Tax Rebates)
Manufacturing companies pay the following corporate tax rate if located in:-
- Accra/Tema 35%
- Regional capitals (25% Rebate) 26.25%
- Elsewhere (50% Rebate) 17.5%
| C. Capital Allowances
The rates of capital allowances remain unchanged as follows:
i. Companies in Banking, Finance, Insurance, Commerce
| | Depreciation Allowance | Annual Allowance | | Buildings | 10% | 3% | Plant & Equipment
Electrical
Non-electrical | 20%
20% | 12.5%
7.5% | | Vehicles | 20% | 20% | | Cars | 20% | 15% | | Computers | 20% | 15% |
Notes:
· Depreciation allowance is computed on cost in the year of purchase and is granted once in the lifetime of the asset and is taken into account in calculating residual balance.
· Annual allowance is granted on residual balance.
ii. All other companies
Depreciation allowances
| Type of expenditure | Rate | No of years | | Qualifying plant expenditure | 50% on cost | 2 years | | Qualifying building | 20% on cost | 5 years |
Unutilised capital allowances are carried forward indefinitely.
| 3. Carry forward losses |
· All companies except mining and insurance companies can carry forward losses for five years.
· Insurance companies carry forward losses indefinitely.
· For mining companies, losses are carried forward indefinitely but restricted to the capital allowance granted for the year.
This is explained by the example below:
| | S1
¢'bn | S2
¢'bn | | Net loss as per financial statement | (3) | (3) | | Add back - net non allowable expenses e.g. depreciation | 1 | 1 | | Adjusted loss before capital allowance | (2) | (4) | | Capital allowance | 2 | 2 |
Notes
· Under S1 both adjusted loss of 2 billion cedis and capital allowance of 2 billion are carried forward.
· Under S2 adjusted loss will be restricted to the capital allowance figure of 2 billion cedis. Therefore the loss to be carried forward is 2 billion cedis and the capital allowance of 2 billion cedis.
Investment guarantees:
Act 478 provides guarantees to all enterprises, including 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.
For all enquiries contact:
THE CHIEF EXECUTIVE
Ghana Investment Promotion Centre,
P. O. Box M193, Accra, Ghana.
Tel: (233)-(21)-66 5125 - 9.
Fax: (233)-(21)-66 3801.
E-mail: gipc@ghana.com
Website: http://www.gipc.org.gh |
