Dr Ibrahim Mohammed Awal, Business Development Minister says the government is coming up with interventions aimed at strengthening local businesses to compete, including providing tax reliefs for start-ups.
Responding to concerns that government was pampering foreign companies with exemptions and reliefs to the detriment of local companies Mohammed Awal, who opened the Second Ghana SMEs and Young CEOs Summit, said the government was not discriminating against Ghanaian companies but rather strengthening them to compete.
According to him, the Ministry would present draft legislation to Cabinet and subsequently Parliament in 2019, which will exempt Ghanaian start-ups from the payment of taxes for three years of its operations, and expected it to be passed in the same year.
This, he said, will allow start-ups to be able to invest in their companies to grow them.
“When you’re starting a business, you need capital. You can’t get the money and pay a lot of taxes, so if they get the money, they will not pay tax; it will be ploughed back into the business so that it can expand and employ people,” he stated, adding that all start-ups will enjoy this benefit.
He noted that aside from providing a good foundation for local businesses by addressing problems in the macroeconomic environment including inflation and high-interest rates, the government also supported over 1,350 Small and Medium Enterprises with loans ranging between GH¢10,000.00 to GH¢100,000.00 from the ministry at an interest rate of 10 percent over two years. The SMEs cut across sector like agribusiness, ICT, and media.
In Ghana, Tax Reliefs are granted by the Government in order to encourage certain forms of behaviour and actions, such as the education of children and care for the aged. Reliefs are granted to individuals or entities as a means of reducing their tax burden.
For a relief to be granted, the employee’s personal circumstances are always taken into consideration. For instance, it is considered that a married person with children attending school will normally be more hard pressed than a person who is single and has no familial responsibilities. Other reliefs are linked to the making of some kind of payment or disbursement (e.g. the payment of a child’s school fees or payment to a charitable organisation).
To claim a relief one has to apply personally to the Commissioner of Tax.