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November 27, 2023
2023-1964

Ghana issues Budget Statement and Economic Policy for the 2024 Financial Year

  • The Government of Ghana has provided an overview of the Budget Statement and Economic Policy for the 2024 Fiscal Year.
  • This Tax Alert highlights key tax aspects of the 2024 Budget, including changes value added tax and import duty provisions.

Executive summary

On 15 November 2023, Ghana's Minister for Finance and Economic Planning (the Minister), Honourable Ken Ofori-Atta, read the 2024 Budget Statement and Economic Policy (the 2024 Budget) in Parliament.

Detailed discussion

According to the Minister, the 2024 Budget has a two-fold short- to medium-term objective:

  1. To keep focusing on growth
  2. To remain on course with this growth trajectory, maintain currency stability and disinflation

Key tax measures proposed by the 2024 Budget include:

  • Target an increase in Ghana's tax-to-GDP (i.e., gross domestic product) ratio from the current 13% to 18-20% to be at comparable levels with peer countries
  • Extend the value added tax (VAT) Zero-Rating provision for locally manufactured textiles and locally assembled vehicles until December 2025
  • Reduce the VAT rate on commercial properties from the standard rate of 15% to a 5% flat rate to simplify administration and enhance revenue mobilization
  • Reduce the rate of VAT and levies on locally manufactured sanitary pads from 15% to 0%
  • Restrict deductions under the Income Tax Act, 2015, Act 896 (as amended) to invoices generated through the VAT Certified Invoicing System
  • Expand coverage of the VAT electronic invoicing system to cover a wider range of taxpayers
  • Grant import duty waivers on electronic vehicles used for public transportation for eight years
  • Provide import duty exemptions to local manufacturers that import raw materials to produce sanitary pads
  • Collaborate with the Ghana Medical Association to secure import tax waivers on vehicles imported for use by medical doctors — aiming to alleviate their transportation challenges
  • Exempt from import taxes agricultural machinery, equipment, and inputs, along with medical consumables and raw materials for the pharmaceutical industry
  • Expand the coverage of environmental excise duties to include plastic packaging and industrial and vehicle emissions to address the negative externalities associated with plastic waste and pollution
  • Provide an eight-year import duty exemption for both semi-knocked and completely knocked-down vehicles to persons engaged in assembling electric vehicles
  • Review the Stamp Duty Act to increase the rates to align them with current economic conditions
  • Adjust the tax-free Personal Income Tax (PIT) band upward to exclude the new National Daily Minimum Wage (NDMW) from taxation
  • Introduce a simplified tax return for individuals in the informal sector to encourage voluntary tax compliance as part of a modified taxation scheme

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For additional information with respect to this Alert, please contact the following:

Ernst & Young Chartered Accountants, Accra

Ernst & Young Société d'Avocats, Pan African Tax — Transfer Pricing Desk, Paris

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

Ernst & Young LLP (United States), Pan African Tax Desk, New York

Published by NTD's Tax Technical Knowledge Services group; Carolyn Wright, legal editor

 

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