Airport Company gets $180million tax relief for new projects

The Ghana Airport Company Limited (GACL) has been granted tax relief of US$180 million for new construction works taking place at almost all airports in the country.

This relief is to reduce the initial project costs, as it reduces the expenditures of the construction companies.

The tax waiver was granted last week when Parliamentary Select Committee on Finance in a report tendered before the House recommending for the House to “approve a waiver of US$185million for a period of five years for the Ghana Airports Company Limited.”

Subsequently, the Committee disclosed that the approval of the request was necessary to improve GACL’s ability to develop the required infrastructure for the country’s airports.

Additionally, the Committee further explained that, the request is necessary to allow GACL pay loans already contracted for infrastructural works at various airports across the country,” the report said.

A number of construction companies are expected to benefit from the proposed tax waiver when approved by Parliament. These include; M/S Mapa Insaat Ve Ticaret (Contractor), M/S Constutora Queiroz Galvao S.A (acting through its branch, Construtora Queiroz Galvao S.A Sucursal Gana), PW Ghana (Mourne Ghana) Amandi Holding Company Limited, Amalgamated Designs and Bans Consults among others who have project agreement with the GACL.

Before the amendment of the Act, 60 percent of all airport taxes went directly to the Ghana Revenue Authority, (GRA) to support the national budget while GACL retained just 40 percent.

The Ghana aviation industry has witnessed tremendous growth in passenger output due to a number of factors such as; increasing number of French-speaking West Africans in Ghana, and the relatively peaceful nature of the country.

This has resulted in the need for massive expansion and upgrading of the country’s airports.

According to available statistics, the domestic transit passenger volumes increased from 14,000 in July 2015 to over 22, 000 in July this year. International passenger output also hit 1.6million this year.

The management of GACL, following the promulgation of the Airport Tax Amendment Act in 2013 which allows the GACL to retain 100 percent of its revenues, turned to private capital to improve aviation infrastructure in the country.

As part of the expansion projects, the GACL secured a loan of US$250 million to undertake the construction of a new terminal known as Terminal 3, at the Kotoka International Airport from a consortium of banks led by Ecobank Capital.

The company later also secured another US$150 million in funds on the strength of its own balance sheet to fund the Ho Airport project, as well as the rehabilitation of Kumasi Airport.

Part of the said amount is also being used on rehabilitation of the Sunyani and Wa Airports.

The repayment projections for the loans were made on the assumption that GACL will not pay tax for the duration of the facility.

The Committee, therefore, held that there was the need to exempt GACL from payment of all applicable taxes to free resources for the repayment of the loan.