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Business Tax Exemptions

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Tax Incentives and Special Dispensation

Ghana has Income Tax Exemptions  and Personal Tax Reliefs  for individuals to ease the tax burdens of qualified persons. The tax law has also made provision for tax incentives and special dispensation aimed at specific industries to lighten their tax burdens and also to encourage investment in such sectors, location and industries as well.

The available tax incentives and special dispensation come in all forms including Tax Holidays and Special Tax Rates. The criteria for qualifying for the tax incentives are industry specific, location specific, and product specific.

Industry Specific Tax Incentives

Function and Operations

The following businesses (sector specific) pay 1% tax during their tax holidays and are mandated to pay the actual tax rates after the tax holidays have expired.

Sector/ Business Period of Tax Holiday Special Corporate Income Tax Rate (%) Actual Tax Rate After Tax Holiday (%)

Agro processing business conducted wholly in the country

First Five (5) years

1

25

Cocoa-by product business wholly in the country

First Five (5) years

1

25

Tree crop farming

First Ten (10) years

1

25

Cash crops or livestock ( excluding cattle)

First Five (5) years

1

25

Cattle farming

First Ten (10) years

1

25

Waste processing business

First Seven (7) years

1

25

Rural Banks

First Ten (10) years

1

8

Real Estate (certified low cost housing)

First Five (5) years

1

25

 

Deductions

An expense is deductible if it is wholly, exclusively and necessarily incurred by the person in the production of the business or investment income for the year.
A deduction shall be disallowed for an expense that is of a capital nature.
An expense that is of a capital nature includes an expense that secures a benefit that lasts for more than twelve (12) months.

Location Specific Tax Incentives include:

Agro-Processing Sector

Agro-processing businesses which use local agricultural raw materials as their main inputs after the expiration of the initial Five (5) year tax holiday would continue to enjoy reduced corporate tax rates according to location in which their manufacturing plants are situated as follows:

Location of Plant Corporate Income Tax Rate (%)
Accra 20
Tema 20
Other Regional Capitals (except Northern, Upper East and Upper West Regional Capitals) 15
Outside regional capitals 10
Northern, Upper East and Upper West Region (including their capitals) 5

Manufacturing companies

Manufacturing companies which have their plant situated outside Accra and Tema shall enjoy the tax incentive stated below:

Location of Plant Corporate Income Tax Rate (%)

All regional capitals except Accra and Tema

18.75

Outside regional capitals

12.50

 

Products Specific Tax Incentive

Exporters of Agricultural Products

Companies which engage in the exportation of non-traditional products such as horticultural products, processed and raw agricultural products grown in Ghana other than cocoa beans, wood products other than logs and timber, handicrafts and locally manufactured goods enjoy a concessionary tax rate of 8%.

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