By Kofi AHOVI
The Association of Ghana Industries (AGI) has proposed to government an increase in the withholding tax for foreign suppliers of service from 15% to 25%.
According to the president of the association, Nana Owusu-Afari, this would put them at par with local companies which are paying 25% corporate profit tax.
The current withholding tax of 5% applied across board for foreign suppliers of services makes local entrepreneurs who are subject to 25% corporate tax, plus all other payroll taxes, uncompetitive, especially in the supply of services in the extractive sectors of the economy.
For this reason, the withholding tax on foreign suppliers of services was increased from 5% to 15% in the 2011 budget statement and economic policy of government. The AGI is however of the view that the 15% is still low.
It made the proposal last week to state its position on the 2011 budget statement of government presented to parliament a fortnight ago.
AGI also recommended to government to review the abolition of the five-year tax holiday for real estate developers, adding that the tax holiday should be for all real estate developers who construct affordable and low-cost houses, regardless of their partnership with government or not.
Owusu-Afari, observed that in order to remove any doubts “there was a need to define what a low-cost house is.”
On the imposition of the 20% environmental tax, AGI opined that most of the packaging in the country is done with plastics, hence the tax would adversely affect industries such as the agro-chemicals, garments, herbal products, fruits, food and many others that use plastics for packaging.
The association further raised concerns about the practicality in exempting sachet water producers from the tax if the tax is on raw materials.
“Most sachet water producers do not produce the rolls, they merely buy them from the plastic roll producers who pay the tax and would therefore pass it on,” Owusu-Afari noted.
The AGI boss continued that it would be unfair to apply the 20% tax on rigid plastic which accounts for 70% of plastic production and does not pollute the environment.
It, however, suggested that the 30% of flexible plastic, which is the area of concern, could be handled by enforcing the laws on biodegradable plastics and encouraging recycling and possibly introducing incentives that will enable the private sector to set up recycling plants to recycle used plastics.
The association noted with regret that the abolition of the Value Added Tax (VAT) deferment for raw materials for local manufacturing companies in the 2011 national budget would be inimical to the growth of manufacturing companies.
“The effect of this is that local manufacturing companies will be uncompetitive, we therefore ask government to review its decision,” Owusu-Afari observed.
AGI however commended government for some policy initiative in the 2011 budget statement.
These include the establishment of a Small and Medium Enterprise (SME) database to provide up-to-date information on the operations of SMEs in various parts of the country; the development of a comprehensive industrial development and competitive legislation for the development of local industries through the promotion of domestic content both in terms of human and material resources; the development of an industrial salt estate at Keta in the Volta Region to promote large scale commercial salt development and the imposition of 35% import duty on rice and poultry products.
AGI hopes that this would help local farmers to build capacity to meet local demand.
The Association of Ghana Industries (AGI) has proposed to government an increase in the withholding tax for foreign suppliers of service from 15% to 25%.
According to the president of the association, Nana Owusu-Afari, this would put them at par with local companies which are paying 25% corporate profit tax.
The current withholding tax of 5% applied across board for foreign suppliers of services makes local entrepreneurs who are subject to 25% corporate tax, plus all other payroll taxes, uncompetitive, especially in the supply of services in the extractive sectors of the economy.
For this reason, the withholding tax on foreign suppliers of services was increased from 5% to 15% in the 2011 budget statement and economic policy of government. The AGI is however of the view that the 15% is still low.
It made the proposal last week to state its position on the 2011 budget statement of government presented to parliament a fortnight ago.
AGI also recommended to government to review the abolition of the five-year tax holiday for real estate developers, adding that the tax holiday should be for all real estate developers who construct affordable and low-cost houses, regardless of their partnership with government or not.
Owusu-Afari, observed that in order to remove any doubts “there was a need to define what a low-cost house is.”
On the imposition of the 20% environmental tax, AGI opined that most of the packaging in the country is done with plastics, hence the tax would adversely affect industries such as the agro-chemicals, garments, herbal products, fruits, food and many others that use plastics for packaging.
The association further raised concerns about the practicality in exempting sachet water producers from the tax if the tax is on raw materials.
“Most sachet water producers do not produce the rolls, they merely buy them from the plastic roll producers who pay the tax and would therefore pass it on,” Owusu-Afari noted.
The AGI boss continued that it would be unfair to apply the 20% tax on rigid plastic which accounts for 70% of plastic production and does not pollute the environment.
It, however, suggested that the 30% of flexible plastic, which is the area of concern, could be handled by enforcing the laws on biodegradable plastics and encouraging recycling and possibly introducing incentives that will enable the private sector to set up recycling plants to recycle used plastics.
The association noted with regret that the abolition of the Value Added Tax (VAT) deferment for raw materials for local manufacturing companies in the 2011 national budget would be inimical to the growth of manufacturing companies.
“The effect of this is that local manufacturing companies will be uncompetitive, we therefore ask government to review its decision,” Owusu-Afari observed.
AGI however commended government for some policy initiative in the 2011 budget statement.
These include the establishment of a Small and Medium Enterprise (SME) database to provide up-to-date information on the operations of SMEs in various parts of the country; the development of a comprehensive industrial development and competitive legislation for the development of local industries through the promotion of domestic content both in terms of human and material resources; the development of an industrial salt estate at Keta in the Volta Region to promote large scale commercial salt development and the imposition of 35% import duty on rice and poultry products.
AGI hopes that this would help local farmers to build capacity to meet local demand.
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