Start-ups want longer tax holidays

Start-up enterprises in the country have called for an extension of government’s recently announced one year tax holiday for operators--a policy designed to encourage production and ensure the survival of new enterprises.

Mr. Ibrahim Awal, the Business Development Minister, told the B&FT that the policy was crucial in growing start-up businesses into giant companies.

“When you start a business it takes sometimes about three years to recover. So when you start and do it very well, we will give you tax holiday so that you can recoup this money, pour it back into the business and grow. Start-ups are very important for us,” he said.

However, start-up proprietors say the years should be extended if the real benefits are to be realised.

Ernestina Agyapong, CEO of Ernie’s Classic Jewellery Production, told the B&FT that: “This is good news for us but if we get at least three years it will not be bad because every business is expected to stabilize by the third year. Even though it [one year tax holiday] is good, it is not enough.”

Saqib Nazir, CEO of Interpay, a payment platform, added that with Ghana facing high unemployment rate and a growing population, entrepreneurs present the future of employment for Africa and “we need to encourage start-ups and entrepreneurs at all levels.

“But one year in Ghana/Africa is too little. We need a two-three year programme. Everything takes longer in our part of the world, but if after two-three years, you haven’t found your feet, then it is time to move on,” he said.

Paul Damalie, CEO of Inclusive Financial Technologies, a pan African identity verification platform, noted that it is really not about how long a tax-break would last but rather about its effectiveness.

“Indeed this is welcoming news for start-ups. All over the world, governments have recognized the need to stimulate start-up growth, and offering tax-breaks definitely is one of those mechanisms utilized in achieving start-up ecosystem growth.

But, if government agencies would effectively understand how tax breaks work, and streamline their back office processes to make recognition and filing of these incentives easy, then it's a win-win for start-ups and government,” he said.

Ms. Akua Obenewaa Donkor, CEO of DecoKraft, a chocolate making company, stated that a year’s tax holiday will only be enough if there is a reduction in taxes for the subsequent years.

“I don’t know the details as to whether it is all the taxes start-ups pay are included, but if it includes all, then it will be a good thing. My tax assessment came and it was very huge for me. So if government says it is giving us a tax holiday, it is good news,” she said.

Aside the new policy introduced by government, Free Zone companies, operating in areas demarcated as Free Zones under the Free Zones Act 504, enjoy a tax holiday of 10 years.