He has raised the alarm that, Ghana risks losing revenue accruing from withholding taxes from specialized sectors following a revision of aspects of petroleum agreements.
According to him, the stability clauses in new petroleum agreements which protects investors from economic shocks until after a period of time, limits the imposition of taxes on such specialized operations.
Ali Nakyea further contends that this comes despite an increase in withholding tax from petroleum operations to 15 percent provided for by Section 71 of the Income Tax Act 896.
Mr. Nakyea made the remarks during the Graphic Business Breakfast Series last week, adding that, “Petroleum operations under Section 71 the rates that have been increased to 15 percent withholding tax; my worry for the economy is that almost all the petroleum agreements we have today will have stability clauses which have the tendency is that no change in fiscal legislation shall affect the investor until after a certain number of years.”
The Tax Analyst further threw caution citing the work of government’s committee established to renegotiate mining deals following similar developments in the mining sector. He however implored the Finance Ministry and the Ghana Revenue Authority (GRA) to reconsider such provisions in order to increase revenue to the state.
“I remember there was a renegotiation team for mining contracts but I do not know how far we have gone with that. It is good for go forward contracts but those that are spent; I think we may not have the significant benefit as a nation,” Mr. Nakyea observed.
The new income tax law which has been in force since the beginning of this year, has been met with much opposition from individuals as well as businesses. Their concerns have been necessitated by the apparent increase in some aspects of charges levied on their income and operations respectively.
Earlier concerns raised included the 15 percent withholding tax on services as well as the 1 percent charge on interest incomes. The GRA subsequently revised these provisions. The 15 percent withholding tax on services was slashed by half to 7.5 percent while the one percent on interest charges have since been abolished.
Source: Adnan Adams Mohammed