Information Minister Kojo Oppong Nkrumah has said that the government of Ghana is giving tax incentives to ARG Royalties Ghana Limited, the foreign leg of Agyapa Royalties, tax incentives to come and invest in the local economy.
Ghana’s legislature approved the controversial Agyapa Mineral Royalty Limited agreement Friday, August 14 despite a protest from the Minority.
Agyapa Royalties Limited (ARL) will trade shares on the Ghana Stock Exchange and the London Stock Exchange for private people to buy.
But the Mineral Income Investment Fund will remain the majority shareholder.
ARL will raise between $500 million and $750 for government to use for developmental initiatives, and then future resources from gold royalties will go to ARL shareholders instead of the Mineral Investment Fund and for that matter government.
Essentially, government is mortgaging expected royalties from gold in exchange for about $500 million – $750 million from ARL.
The Minority said the deal makes it impossible for a future government to replace managers of Asaase Royalties Limited although the Minerals Income Investment Fund will remain the majority shareholder.
The flagbearer of the National Democratic Congress (NDC), John Dramani Mahama, also questioned the deal and said he will not recognize it in case he wins this year’s polls.
But Mr Oppong Nkrumah, speaking on Joy FM Monday, August 24 said: “Agyapa is a Ghanaian company but ARG Royalties Ghana Limited is the foreign leg…if you want to attract investors to bring in their money to fund the 40% share flotation. We’re offering them tax incentives for that money they are bringing in. When the royalties accrue to the entity, Agyapa, the shareholders therein including the government of Ghana will not be paying taxes on the earnings therefrom, but if they proceed to invest that money in any other investible vehicle they’ll be paying taxes on it.”
He added: “In this country, we sit in Parliament on a daily basis and [give] tax concessions to several entities…”
He maintained that Agyapa Royalties will not be paying tax because royalties in itself are tax and there is no way tax is paid on tax.
“Where have you heard we pay tax on tax?” he asked, further stating that: “I’m saying to you that you don’t pay taxes on royalties. If anybody has a substantive thing against this transaction, let him raise it but this cooked-up story of Osafo-Maafo’s son and this one’s friend, I think it is becoming a beggared argument in this country. This is a fine transaction.
“Let us stop bastardizing transactions that mean well for the republic. If there’s something untoward here, somebody should raise it but for all I know, you don’t tax royalties. Royalties in [the] first place [are] more or less a tax; you don’t pay a tax on a tax,” he charged.
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