Manufacturing firms express concern about tax regime - Survey
Accra, Feb 1, GNA - A survey of manufacturing companies has revealed that the current tax regime was imposing unnecessary hardships on their operations, raising production cost, constraining their cash flow and making them uncompetitive.
The operators say that recent Government taxes were impacting negatively on their operations instead of generating growth, according to the survey, which the Association of Ghana Industries commissioned the AA&K Consulting Services to conduct.
They thus accused the Government of pursuing revenue generation at the expense of industrial expansion and productivity.
The survey, which examined the impact of taxation on the operations and growth of the industrial sector in Ghana, featured over 50 selected companies.
Discussing the findings with members of the AGI in Accra, Mr David Adom, a Tax Consultant, said although Act 592 had progressively reduced the corporate tax rate, the introduction of the National Reconstruction Levy (NRL) had offset any gains that companies could have enjoyed from the reduced tax levels.
The Reconstruction Levy, which ranges from 2.5 per cent to 10 per cent on corporate profits before tax was introduced in 2001 for two years but was extended in 2003 for an additional period of three years.
Thus, currently, the companies not listed on the Ghana Stock Exchange pay the rate of tax on corporate profits of between 35 per cent for those paying NRL at 2.5 per cent to 42.5 per cent for companies paying NRL of 10 per cent.
He said the payment of such high tax rates increased the cost of doing business and also reduced the competitiveness of the local manufacturer.
The study also found that most companies were culpable of not filing their returns within the statutory period of four months.
Mr Adom said the delay in filing returns made it difficult for overpayment to be established and refund obtained or the amount used to offset liabilities.
There are also general concerns about the administration of withholding tax with 68.8 per cent of companies surveyed complaining that the policy was locking up their capital.
Dr Percival Kuranchie, Chief Consultant with the AA&K Consulting Services, said there was the general feeling among operators that certain areas of the Government's new fiscal policy measures were in serious conflict with the idea of a "golden age of business." He said for the country to be able to reduce poverty the Industrial Sector must grow at a sustained high rate to generate foreign exchange and create employment.
Dr Kuranchie said the mode and administration of the taxes had conspired to make the tax burden excessive thus stifling the growth of companies.
This, he said, had made some manufacturers to believe that the tax regime was skewed in favour of imported products.
Dr Kuranchie called for overhaul of the tax regime to reduce the cash flow problems of manufacturers to make the Sector competitive.