Parliament Grants US$3.1 Tax Exemption

Parliament has granted a waiver of domestic VAT amounting to US$3.15 million tax exemption to Avic International Holding Corporation of China.

This is for the local purchases and services in respect of the rehabilitation and up-grading of equipment in technical universities, polytechnics and vocational training centres.

This is coming at a time when the country’s tax exemption regime has become a major concern to everyone, with even the President of the country pointing out in his state of the nation address in 2018 that the regime was costing the nation billions of cedis annually.

Although the Ministry of Finance has laid before Parliament a new bill to reform the regime, the bill is yet to be passed into law after over a year of being laid before the floor of Parliament.

Background

Parliament in March 2018 approved by resolution the concessional loan agreement between the government of Ghana and the EXIM Bank of China for an amount of US$119 million to finance this rehabilitation project,

Subsequently, Parliament in July 2018 approved by resolution the supplementary contract agreement as well as the commercial contract between the government of Ghana and Avic International Holding Corporation of China for the implementation of the project.

Following this up, Parliament again in April 2019, approved the request for the waiver of imports duties, VAT, GETFUND, import NHIL, special import levy, EXIM levy, AU and ECOWAS levies, amounting to US$26.96 million on project materials and equipment to be procured under the project.

The US$3.15 waiver on domestic taxes therefore bring the total waiver to US$30 million.

Project objective

A report from the Finance Committee in Parliament indicated that the objective of the rehabilitation project is to improve the employability of Ghanaian youth by providing them with the relevant skills and competencies required for self and formal employment.

This is to help reduce unemployment among the youth and also help encourage indigenous entrepreneurship.

It is also to further provide Ghanaian industries with the relevant manpower to make them globally competitive.

The committee observed that the project when implemented is expected to produce highly skilled human capital through improved teaching and learning environment in the beneficiary public TVET institutions and increased supply of high caliber TVET graduates.

This will also be done through increased participation levels at TVET and increased supply of high caliber TVET instructors.