Gov’t to lose GH¢800m in tax exemptions to car manufacturers

Government is expected to give tax exemptions of more than GH¢800million within 3 years to automobile giants which will be setting up vehicle assembly plants in the country, a report by the Joint Committee on Finance and Trade, Industry and Tourism on the Customs (Amendment) bill, 2020, in Parliament has revealed.

Automotive giants such as Volkswagen, Toyota, Suzuki, Nissan Motors, Sinotruk, among others, have all expressed their interest and plans to set up assembling plants in Ghana to boost the country’s industry growth.

Hence, the Customs (Amendment) bill, 2020, was presented to Parliament last month to amend the Customs Act, 2015 (Act 891) so as to provide incentives for these automotive manufacturers and assemblers registered under the Ghana Automotive Manufacturing Development Programme (GAMDP). However, this move will result in an over-GH¢800million loss to the economy over the next three years in the form of tax exemptions.

“As to how much revenue will be impacted by the passage of the bill, the Committee was informed that the review in policy as contained in the bill could lead to an estimated revenue loss of approximately GH₵ 802.2million for the first three years,” the report said.

Commenting on this, the Deputy Minister for Finance, Abena Osei-Asare, said in an interview with the media that the move should not be considered a loss as it will generate some more benefits for the country in the long-term.

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According to her, importers will still pay import duties to clear their vehicles which do not fall into the category of vehicles that will not be allowed in the country.

“We are going to give them exemptions to the tune of GH₵802million, but we believe this will be partially offset by the vehicles that do not fall in this range because people will still bring in vehicles, so we will still charge import duties. But we are looking at the long-term. As these companies come to set up here, it will increase jobs for our nation and also make cars relatively cheaper compared to cars that are imported,” she said.

The Customs bill also seeks to prohibit the importation of salvaged motor vehicles and specified motor vehicles over ten years of age into the country, as well as increase the import duty on specific motor vehicles and provide import duty exemptions for security agencies.

But the proposal to ban salvaged and imported vehicles aged over ten years has since been met with outrage from car dealers, who consider the move to be too harsh and a potential killer for their businesses.

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