CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Ghana To Review Tax Expenditures

Ghana To Review Tax Expenditures

by Lorys Charalambous,, Cyprus

22 January 2016

The International Monetary Fund (IMF) has welcomed the Ghanaian Government's fiscal consolidation efforts, including its various revenue-raising initiatives.

The Government is seeking to implement an adjustment of two percent of gross domestic product (GDP). This would bring the country's deficit to about 5.3 percent of GDP in 2016. Over the medium-term, it aims to progressively reduce the deficit to 3.7 percent and three percent of GDP by 2017 and 2018, respectively.

While continuing with measures in place since 2013, the Government said it would look to broaden the tax base and boost compliance rates. For example, a presumptive income tax for small businesses and new withholding tax mechanisms in key sectors have been introduced recently as part of the new Income Tax Act, 2015 (Act 896), which will simplify the country's income tax regime and broaden its scope.

In the new Act, there are specific provisions governing the imposition of income tax and the various means and timing for its payment. The legislation defines chargeable income from any employment, business, or investment, and, in each case, sets out the deductions and allowances available.

Rules are also established with regard to the calculation of income tax, such as the methods to be used for tax accounting. It also sets rules for the calculation of gains and losses and on tax residence and permanent establishments. The Act includes a general anti-avoidance rule, rules on income splitting, and transfer pricing rules.

A review of Ghana's investment promotion legislation is also proposed. This will preclude government ministries, departments, or agencies from negotiating contracts that grant tax exemptions without approval from the Ministry of Finance.

The Government has also asked the World Bank to conduct an independent assessment of tax expenditures, which have been quantified at around one percent of GDP of customs duties and corporate income tax, and close to four percent of GDP in relation to value-added tax. The Government is to request technical assistance from the IMF to guide reforms aimed at reducing tax expenditures substantially, and, in the interim, has agreed to increase the use of tax credits, instead of providing outright exemptions.

TAGS: compliance | tax | small business | business | value added tax (VAT) | tax compliance | fiscal policy | VAT legislation | law | gross domestic product (GDP) | International Monetary Fund (IMF) | tax credits | legislation | tax breaks | tax reform | Ghana | Tax

To see today's news, click here.



Password Reminder

Please enter your email address to receive a password reminder.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Tax-News+ Updates

Receive FREE daily updates from, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...


Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »