The Chief Executive Officer of Ideal Finance, Dr Nii Kotei Dzani, has called on the government to scrap tax incentives granted to foreign businesses to help save the nation some revenues and create a level playing field for competition in the private sector.
He said the government should also regulate the complete repatriation of profits by non-resident investors, otherwise Ghana would continue to lose in two ways.
The complete scrapping of tax incentives, mostly granted to foreign entities, would help save the economy some US$1.2 billion in revenues, which is reportedly lost during tax exceptions, Dr. Dzani said at a symposium to commemorate the fifth anniversary of Ideal Finance in Accra.
“When you do your business somewhere, nobody can say you shouldn’t take your profit away but what I am saying is that you should not be allowed to repatriate all the profit at the same time. There should be a regulation on how much is allowed,” he said.
He added that although the indigenous business community was ready to compete with their foreign counterparts, the current tax incentive regime placed local businesses at a disadvantage, thereby making them unable to grow.
“We the indigenes are not interested in tax exemptions. What we want is a level playing field. We are ready to compete with the multinationals but in the case where you grant tax exemptions to foreigners and you don’t grant it to us, how do you expect us to compete?” Dr Dzani asked.
Losing in both ends
Currently, the country’s tax laws allow 100 per cent tax repatriation by non-resident investors, which helps to make Ghana one of the attractive places for foreign investors.
In the other breadth, however, the situation fuels capital flight which is rife in Africa.
In 2011, an advocacy group, the Tax Justice Network, reported that the continent lost a total of US$ 4.9 billion in capital flight between 1970 and 2008. Another US$ 854 billion was illegally repatriated out of Africa within the period.
Given that capital flight, just like tax exemptions, denies the country revenue and helps to destabilise its currency, the Ideal Finance CEO said Ghana needed to act fast or it would continue to be at the receiving end.
“We are not saying that foreigners should not participate in our economy. We are not saying that foreigners should not repatriate their profit. What we are saying is we should regulate the amount of profit that an investor can take out.”
“If we don’t do that, then what it means is we give them tax exemptions to come in but we don’t give them restrictions in taking the profit away. So at the end, we lose at two ends,” he said.
The Ideal Finance story
The symposium was to provoke discussions on how the private sector could help itself to grow.
“We want to provoke a discussion on how the private sector can help the sector to decrease the yawning unemployment gap in the country. No country can develop without a strong private sector but as business people and entrepreneurs, we always get worried with what is happening in our country,” Dr Dzani, who worked with the Barclays Bank of Ghana, said.
He mentioned the current power rationing, cedi depreciation and the general cost of doing business as some of the challenges that needed to be addressed to make life bearable for the business community.
The company was started five years ago with an asset base of GH¢27,000. As of June this year, the asset base has grown to GH¢ 200 million. It is aiming at becoming a universal bank by 2017.
Source: Graphic