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10.11.2005 Business & Finance

BUDGET: Government reduces corporate tax

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Accra, Nov. 10, GNA - The government on Thursday reduced the Corporate Tax further from 28 per cent to 25 per cent, effective January 2006.

The tax was reduced from 32.5 per cent to 28 per cent in 2005 with a promise to reduce the rate further to 25 per cent in 2007. Finance Minister Mr. Kwadwo Baah-Wiredu who announced this when he presented the 2006 budget to Parliament said that the reduction in 2005 was in pursuance of the government's objective to promote rapid growth through the private sector.

He said the reduction in 2006 was in the light of the robust performance of corporate taxes in 2005 and was aimed to further enhance expansion in corporate Ghana. Mr Baah-Wiredu said: "..,within a matter of two years, the corporate tax rate has been reduced by 7.5 per cent points from 32.5 per cent to 25 per cent.

"This will complement the reduction in National Reconstruction Levy Rates to release even more resources to the private sector for expansion and creation of jobs."

The Minister said in the 2005 Budget Statement, the government promised to further reduce the National Reconstruction Levy (NRL) rates in 2006 and eventually eliminate it in 2007.

He announced that Part A Companies would see a drop from 7.5 per cent to 5.50 per cent.

That of Part B Companies would move down from 5.0 per cent to 2.50 per cent while the levies of Part C Companies and all other companies would be abolished with effect from January 1, 2006. Mr Baah-Wiredu said the effort was to keep faith with the business community and to free more resources for possible expansion of industries.