[ 2016-06-15 ]

Parliament approves US$832m tax waiver on US$1.5bn project
Parliament has approved the Finance Ministry’s
request for tax concession amounting to US$ 832
million on the US1.5 billion Tema Port Expansion
project which is being undertaken by the Meridian
Port Services (MPS) Limited.

The Tax concession is in respect of Value Added
Tax (VAT), National Health Insurance Levy, Customs
Duties, Corporate and Withholding Taxes, and other
applicable taxes.

The Chairman of Parliament’s Finance Committee,
Mr James Avedzi, who moved the motion for the
approval, said the waiver was necessary to ensure
that the entire credit facility sourced was
available for the execution of the project.

He said the waiver was also aimed at sustaining
the attractiveness of the project to the
financiers (MPS) and other stakeholders and also
to ensure that the government did not incur
additional cost on the project.

He also mentioned that the waiver was on
materials and equipment including other related
taxes for the finance, design, construction,
equipping and operation of the project.

The exemptions

The required exemptions include an exemption from
corporate income tax for 10 years after date of
first commercial use of the facility and a reduced
corporate tax of 15 per cent after 10 years for
five years.

It also includes an exemption from tax on
dividend for 20 years to both resident and
non-resident shareholders.

According to the Finance Committee, the Ghana
Revenue Authority (GRA) had assessed the
applicable taxes, duties and levies for which the
exemptions are being requested.

Minority not happy

But the Minority Members in Parliament however
described the deal as a bad one, adding that there
were too many giveaways.

The Member of Parliament for New Juabeng North,
Dr Assibey Yeboah, speaking on the floor of the
house, said there was no logic in giving out over
55 per cent waiver on a project that the country
would have only 30 per cent shareholding in.

He said the executive approval that came to
parliament asked for US$982 million in tax
concessions, almost a billion but the finance
committee reduced it to US$832 million which was
still too much on the higher side.

He argued that had the committee reduced the
figure further down, MPS would still be satisfied
and gone ahead with the project because it was all
giveaways.

“MPS are investing US$1.5 billion and we are
giving them US$ 832 million which means for each
dollar that they invest, we give them a tax waiver
of 55 cents,” he stated.

“The National Fiscal Stabilisation Levy, a levy
that was brought in to stabilize the economy.
Banks pay it, Telcos are paying it, and Breweries
are paying it so why should we exempt MPS from
paying it?” he quizzed.

“We are also exempting them from paying the
NHIS levy; are their workers not going to benefit
for the NHIS?”

He said this are the kind of projects that he
expected the government to borrow money and
undertake because it was a project that would rake
in over US$ 5 billion for the country and would
have paid for itself.

Legal basis and justification for the request

Commenting on the legal basis and justification
for the request, the Deputy Minister for Finance,
Mrs Mona Quartey, said strategic investments in
excess of US$ 50 million qualified an investor to
tax concessions under section 26 (4) of Act 865
and Internal Regulations issued by the Ghana
Investment Promotion Centre (GIPC).

She said in mostly all jurisdictions, port
projects of this magnitude were normally
undertaken by the government.

She however indicated that, under this project a
private partner who was mindful of the extensive
capital outlay, the expected levels of efficiency
in management practices and span of time to
recover the investment had elected to take all
risks and responsibilities of the project.

She said the tax concession was therefore to ease
the effect of the investment risk and sustain the
attractiveness of the project to the financiers
and other major players.

Source - Daily Graphic

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