An agro processing business is the business of processing crops, fish or livestock produced, caught or raised in Ghana from their raw state into edible canned or packaged products. Ghana has an incentivised tax regime for agro-processing businesses. The applicable taxes and incentives for agro-processing businesses in Ghana are outlined below:
Income Tax Act, 2015 (Act 896) (the “ITA”)
The ITA grants a 5 year tax concession to businesses engaged in agro-processing. During this 5 years tax concession, agro-processing businesses enjoy a reduced tax rate of 1%.
Location tax incentives
After the 5 years tax concession, businesses engaged in agro-processing in Accra and Tema are taxed at the rate of 25%. Agro-processing businesses located outside Accra and Tema enjoy location tax incentives as follows:
(a) 18.75% if located in a regional capital; and
(b) 12.5% if located elsewhere in Ghana.
Free zone registered enterprises
Agro-processing businesses registered with the Ghana Free Zone Authority are exempt from tax for a period of 10 years. A reduced tax rate of 15% is chargeable on free zone enterprises after the 10 years tax concession.
Excise Duty Act, 2014 (Act 878) (the “EDA”)
The EDA imposes excise duty on the production of the following:
(a) malt drinks;
(b) beer stout;
(e) tobacco products; and
(f) cidar beer.
The rate of excise duty imposed under the EDA ranges from 0% to 150% of the ex-factory price.
National Fiscal Stabilization Act, 2013 (Act 862) (the “NFSA”)
The NFSA imposes a national fiscal stabilisation levy of 5% on Breweries. No other agro-processing business is subject to the NFSA. The national fiscal stabilisation levy is payable in respect of profit before tax for 2017 only.
Customs Act, 2015 (Act 891) (the “Customs Act”)
Import duty on raw materials under the Customs Act is 5%. The import duty on equipment however, ranges from 5% to 35%. Companies registered with the Ghana Investment Promotion Centre (the “GIPC”) and Free Zones Authority are entitled to a 0% import duty on the importation of equipment.
A foreign investor interested in an agro-processing business in Ghana will, in addition to the tax incentives, be entitled to investment guarantees, expatriate quotas and free transfer of capital, profits, dividends and personal remittances.
The foreign investor must however, register with the GIPC to enjoy these benefits. An agro-processing business which is set up solely for export trading and manufacturing is not required to satisfy the minimum foreign capital requirement for foreign investment in Ghana.
Article by: Thecla Wricketts, Associate at Bentsi-Enchill, Letsa & Ankomah
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