For a period of eight years, the government intends to eliminate import duties on imported electric vehicles used for public transit.
Additionally, the program will encompass electric vehicles that have been partially or fully disassembled and imported by Ghanaian-registered EV assembly companies.
On Wednesday, November 15, 2023, the minister introduced the 2024 Budget Statement in Parliament and stated that the government is on track to raise the nation’s target tax-to-GDP ratio from 13 to 20%.
“Mr. Speaker, since 2017, we have approached tax policy by providing the private sector with a great deal of relief, but starting in 2020, pressure on expenditures forced us to take a more aggressive stance.
“Mr. Speaker, further to the above, the following reliefs have been prioritised for implementation: i. Extend zero rate of VAT on locally manufactured African prints for two more years.”
“Waive import duties on import of electric vehicles for public transportation for a period of eight years. Waive import duties on semi-knocked down and completely knocked down Electric vehicles imported by registered EV assembly companies in Ghana for a period of eight years,” Mr Ofori-Atta stated.
But Mr. Ofori-Atta drew attention to the fact that “as we all know, our country’s 13% tax-to-GDP ratio is far below our peers.” We are on target to achieve our goal of 18–20%.
“In that regard, it is difficult to implement all the structural reforms and tax reliefs needed to immediately lower and/or eliminate certain tax handles. However, I assure this August House, that we have heard, we believe in lower taxes for industry, and we are working at this aggressively with the GRA and to be cemented with the standing committee of the Mutual Prosperity Dialogue”, he said.
Mr Ofori-Atta, thus, announced the following tax reliefs that have been “prioritised for implementation”:
i. Extend zero rate of VAT on locally manufactured african prints for two (2) more years;
ii. Waive import duties on import of electric vehicles for public transportation for a period of 8 years;
iii. Waive import duties on semi-knocked down and completely knocked down Electric vehicles imported by registered EV assembly companies in Ghana for a period of 8 years;
iv. Extend zero rate of VAT on locally assembled vehicles for 2 more years;
v. Zero rate VAT on locally produced sanitary pads;
vi. Grant import duty waivers for raw materials for the local manufacture of sanitary pads;
vii. Grant exemptions on the importation of agricultural machinery equipment and inputs and medical consumables, raw materials for the pharmaceutical industry;
viii. A VAT flat rate of 5 per cent to replace the 15 per cent standard VAT rate on all commercial properties will be introduced to simplify administration.
He said to address the “negative externalities of plastic waste and pollution, the government will review and expand the Environmental Excise Duty to cover plastic packaging, and industrial and vehicle emissions”.
Also, he said the Stamp Duty Act, 2005 (Act 689) has not been reviewed since its enactment in 2005. “To realign the rate with current economic realities, Government, in 2024, will review the rates and fees for stamp duties. The bands subject to ad valorem taxes will be expanded while the specific rates will be reviewed upwards”.
He notified the house that a “simplified tax return will be introduced as a means of promoting voluntary compliance as part of the modified taxation scheme for individuals in the informal sector. This approach will make it easier for taxpayers to fulfill their tax obligations to the State”.