2020 elections: Tax incentives in NDC and NPP manifestos compared

The opposition National Democratic Congress (NDC) on September 7, 2020, launched its manifesto for the December elections – two weeks after the governing New Patriotic Party (NPP) – setting the stage for a comparative analysis of who has the best ideas.

Top on the priority list of the two main contenders of this year’s presidential election is the economy, job creation, infrastructure, agriculture and governance.

But for the two parties, tax incentives featured as among the strategies to boost local business growth and promote small businesses.

According to the NDC, led by John Dramani Mahama, its main goal, if it wins the upcoming election, is to deliver “jobs, prosperity and more.”

Being the incumbent, the NPP says its manifesto that it is focused on consolidating the gains chalked in its four years in office and setting the stage for the next level of our nation’s development.

The NPP and President Nana Addo Dankwa Akufo-Addo believe it has kept faith with the promises it made to Ghanaians in 2016 and has “delivered or are delivering 80%” of its 2016 manifesto promises.

NDC

Among other intentions, the NDC promises to “aggressively promote and protect indigenous Ghanaian businesses, to ensure greater Ghanaian ownership of the commanding heights of the economy, such as banking, insurance, construction, telecommunications, the extractive sector, energy, and international trade.”

The NDC hopes to do this by taking the following tax decisions:

a. Tax Cuts for Jobs

• Small businesses will be exempted entirely from corporate and personal income tax;

• Corporate income tax for medium size companies will be reduced from the current 25per cent to 15 per cent;

• Newly established medium-sized companies that employ up to twenty staff will be exempted entirely from the payment of corporate income tax for one year;

• Newly established medium companies that employ more than 20 staff will be exempted entirely from the payment of corporate income tax for two years;

b. exempt commercial vehicles and other equipment imported into the country for commercial, industrial and agricultural purposes from import duty;

c. review the Customs (Amendment) Act, 2020 (Act 1014) to scrap the law banning the importation of salvaged vehicles. This will save the local automotive industry, especially Suame Magazine, Kokompe and Abossey Okai from collapse;

d. encourage vehicle assembling companies to operate as a complement to local industry;

e. reverse the decoupling of VAT (12.5 per cent), NHIL (2.5 per cent), GETFund (2.5 per cent), which has brought untold hardship to Ghanaian businesses and households;

f. introduce a Rural Investor Incentive (RII) to create meaningful employment opportunities for youth in rural areas. This is intended to address the adverse effects of rural-urban migration.

Investors in rural communities:

• will be exempted from dividend and capital gain tax

• employing up to fifty (50) persons will be granted tax exemptions and other incentives on the importation of capital equipment

g. provide special tax incentives for indigenous value chain industries such as mineral processing, petroleum-based, agro-based, and pulp and paper industries, to unlock potential sustainable job opportunities. We will:

• use special tax incentives to maximise the gains from the value chain of indigenous manufacturing activities

• introduce the agriculture value chain tax incentives regime within the first quarter of 2021

h. introduce a Tax Support for Export Growth (TSEG) to address trade and balance of payment deficits and also in furtherance of the One Million Jobs Plan. Special tax incentives will be offered Ghanaian businesses in the Export-Oriented Industries (EOI) to stimulate exports

i. provide the Shipping Industry with special tax incentives to achieve Ghana’s objective of becoming a world-class cargo hub on the West African coast (similar to Singapore). For example, tax incentives, efficient logistics support, safety and security

j. revisit Ghana’s international tax policy to protect the tax base and profit shifting. We will:

• develop Ghana’s model tax treaty negotiating manual

• strengthen Ghana’s tax treaties to eliminate transfer pricing

• establish and equip a new Centre with experts to specifically handle international tax-related issues.

NPP

Generally, the NPP says in its 2020 manifesto that it favours targeted, project-based tax incentives (instead of blanket incentives) for private developers to build more social housing, as well as inner-city redevelopment and revitalisation schemes.

The NPP also stated that it is committed to promoting the setting up of integrated local manufacturing industry to support the housing sector through tax incentives, creation of markets as well as tax rebates on some imported materials among others.

The NPP, in its 2020 manifesto states what it promised in 2016 and gives an update on what has achieved so far.

The tax incentives under the NPP are as follows:

- Offer tax incentives to young entrepreneurs to encourage them to initiate start-ups.

The NPP says it has offered tax incentives as part of the National Entrepreneurship and Innovation Plan (NEIP).

- The NPP in 2016 promised to offer tax incentives to local real estate developers and suppliers of building materials.

According to the NPP, currently, real estate developers constructing low cost affordable residential premises approved by the Minister for Works and Housing have a chargeable income tax rate of 1% for the first five years. Also, VAT on Real Estate sales has been removed.

- To promote the industry, the NPP government promised to partner private local and foreign investors to develop large scale strategic anchor industries to serve as growth poles for the economy.

According to the NPP, six different brands have started rolling off the VW Assembly Plant in Ghana, namely Amarok, Caddy, Passat, Polo, Teramont, and Tiguan.

The NPP 2020 manifesto said Sinotruk has also commenced assembling a variety of trucks in Ghana and Kantanka has been granted tax incentives and a license to continue its auto assembly operations under the Ghana Automotive Manufacturing Development Policy.