ENHANCING THE EASE OF DOING BUSINESS: REFORMING THE COMPANY AND INSOLVENCY LAWS OF GHANA
Accra, Ghana, 26 September 2017 – On behalf of the Board of the American Chamber of Commerce (AMCHAM) and the Governing Council of the Ghana Association of Restructuring and Insolvency Advisors (GARIA), we express our profound gratitude to the Attorney-General & Minister of Justice Hon. Gloria Akuffo, the Panel (Prof. Bondzi-Simpson, Felix Ntrakwah, Tony Oteng Gyasi, Hon. Vicky Bright, Felix Addo, Justice V.C.R.A.C. Crabbe and Mavis Amoah), AMCHAM and GARIA Members and the General Public for honoring our invitation.
This event which focused on “Enhancing the Ease of Doing Business: Reforming the Company and Insolvency Laws of Ghana” unearthed thought provoking pieces aimed at reducing the premature insolvency of businesses in Ghana, promote corporate restructuring and update the Companies Act 1963 to reflect the modern trend in doing business.
The World Bank reports that in 2017, globally, in resolving Corporate Insolvency, Ghana stands at 155 in the ranking of 190 economies. In addition, resolving insolvency takes 1.9 years on the average and costs over 22.0% of the debtor’s estate, with the most likely outcome as the liquidation of the company. Nevertheless, even when a business goes into liquidation, current laws do not adequately protect creditors and shareholders’ interests as well as ensure a safe transition of the business.
Per the Government of Ghana Ease of Doing Business Initiative Concept Note (2017); “It is the vision of the government to transform the business climate environment with the political will to bring about the fundamental reforms to set the stage for robust growth, and position Ghana as a competitive, global business and services-based platform, with an open economy…,” The realization of this vision is premised on effective business legislation that could streamline the activities of businesses to not only preserve jobs but create employment.
Previous Attorney-Generals have made efforts to have the revised Company and Insolvency Bills passed into law and the current Attorney-General, Hon. Gloria Akuffo is very optimistic about the passage of the two Bills and assured stakeholders that the Bills which are currently before Cabinet would be sent to Parliament for consideration in due course.
RECONSIDER 3% VAT FLAT RATE SCHEME (“VFRS”)
Recommendations- by AMCHAM Ghana
The American Chamber of Commerce, Ghana is the representative arm of U.S businesses in Ghana and Ghanaian businesses with significant U.S connection or seeking to do business in the U.S. Our Members over the decades have made significant contribution to the economic development of this Country and in the process, created prosperity for our two nations.
At our meeting on 18th July to discuss the New 3% VAT flat rate, members commended the Government of Ghana for re-introducing VAT Flat Rate Scheme with the objective to expand the tax base and get most businesses in the SME sector to pay taxes. However, they observed that the introduction of this tax and expanding it to cover manufacturers who sell to end users or retailers, large wholesalers and retailers has resulted in unintended outcomes which is likely to affect businesses in a negative way.
The new VFRS does not allow businesses that have paid input VAT to be reimbursed as was done previously, forcing these businesses to either absorb the 3%, thereby reducing their margins or pass it on to final consumers, thereby increasing prices to consumers.
The new VFRS seems to also favour importers and distributors, than manufacturers who import intermediate goods for value addition and subsequently wholesale and retail.
AMCHAM Members recommended that Government should consider the following options:
- Re-implementing the VFRS provision in the VAT Act, 2010 (Act 810) repealed, with slight modifications. Act 810 provided for thresholds which made it easier to administer. As such, the threshold should be reintroduced and this could be based on the presumptive tax threshold provided for in the Income Tax Act, 2015 (Act 896).
- Limiting the VFRS to only micro and small enterprises as it has proven to be a useful way to expanding the tax net.
- For manufacturers whose businesses span more than one sector (i.e. wholesaling and retailing), for whom both 17.5% and 3% will apply, Government should put in place methods that allow such manufacturers to apportion supplies made and account for VAT separately under both VFRS and standard rate scheme. The dominant business line could also be considered in determining the VAT scheme such manufacturers should operate. To this end, the definition provided for a “wholesaler” and “retailer” should be updated to consider the status of such manufacturers who operate multiple business lines and the general deductible input tax in respect of the apportionment should be made public in a practice note.
- There is a technical/legal gap in the GRA Practice Note with regards to treatment of the non-deductible 17.5% input VAT under the scheme. The Practice Note provides guidance to the
- effect that the non-deductible 17.5% input VAT should be added to the cost of the product prior to computing the 3% output VAT.
- The guidance may appear to contradict the VAT Act, 2013 (Act 870) in section 43(1a), where the value of a taxable supply is defined to exclude “the tax” (where “the tax” here refers to VAT). The extent of the contradiction in the Practice Note, is causing so much confusion between vendors and buyers in practice and this must be resolved immediately.
- Businesses should be given the opportunity to choose whether to exclusively operate the standard rate scheme or the flat rate scheme to make accounting easier.
28 April 2017
Review taxes and duties on software to enhance fight against cybercrime and piracy.
The American Chamber of Commerce (AMCHAM) Ghana, on World Intellectual Property Day is calling on the Ministry of Finance and the Parliament of Ghana to remove the high taxes and duties on software imported into the country in conformity with the World Trade Organization Decision on Valuation of Carrier Media Bearing Software for Data Processing Equipment (WTO Decision 4.1).
World Trade Organization Decision on Valuation of Carrier Media Bearing Software for Data Processing Equipment provides guidance to custom authorities on the valuation of software which should be based the cost of the medium on which the software (data) is stored. For example software information stored on a CD-ROM, will be valued based on the cost of the CD-ROM, according to this WTO Decision.
However, this Decision is not being applied in Ghana. Ghana Customs valuation of software includes the intellectual property component and a number of taxes which sum up to about 42% of the cost of media increasing the price of software on the Ghanaian market.
The increase in taxes has contributed to the high cost of genuine software products available in Ghana, making many software users susceptible to pirated software products which usually come at a low cost. Some industry experts estimate that, at least 80% of all computers in Ghana are running on pirated software.
There are significant risks for government institutions, businesses, and individuals using non-genuine and pirated software. Pirated license does not benefit from online upgrades provided by genuine software companies from time to time to protect against malware and other security viruses. Also pirated software could easily open the door to cybercrime which has far reaching consequences for government institutions, and individuals including system crashes and hacking.
The American Chamber of Commerce is an affiliate of the U.S Chamber of Commerce in Washington DC and the representative arm of U.S businesses in the country. The Intellectual Property Hub (I.P Hub) of the Chamber seeks to advocate for enforcement of intellectual property rights in the country, and works with like minded organizations to raise awareness about I.P issues in the Country.
February 10th 2017
AMCHAM Ghana Meets U.S Deputy Trade Coordinator
The American Chamber of Commerce-Ghana (AMCHAM) has held a roundtable meeting with U.S Deputy Trade Africa Coordinator to discuss the role of American businesses in promoting foreign direct investment into the country. Eleven companies in the ICT, Agribusiness and infrastructure sectors of Ghana met with the Ms. Alicia Robinson-Morgan, the U.S Deputy Trade Africa Coordinator
Ms. Alicia Robinson-Morgan is in the country to appraise the status of implementation of the Trade Africa Expansion Initiative in Ghana. Trade Africa is an initiative of the US Government that targets key barriers to trade and investment; and promotes regional integration and trade competitiveness, specifically aiming to increase intra-regional African trade and exports to the US and reducing the time it takes to import or export from ports to land-locked interiors on the continent.
Discussions between AMCHAM members and the Deputy Coordinator bordered on challenges businesses faced
operating in the country which included the proper definition and application of local content laws; contracts and contracts enforcement in light of change of government; and transparency issues in public procurement. Other issues were: the number of regulatory agencies and requirements for operating in certain sectors and the attendant cost of obtaining the required licenses, currency issues and the increasing burden of taxes, fees and charges.
Executive Secretary of AMCHAM Simon Madjie stated that “our objective is to bring prosperity to our two nations through free enterprise and so, we welcome any discussion aimed at improving the business environment and making Ghana one of the easiest places in the world to do business”
About Trade Africa
Trade Africa is a US Government Initiative to strengthen the U.S. relationship with Africa in order to significantly expand U.S.–African private and public sector collaboration to increase trade with and within Africa. In Ghana Trade Africa is supporting the Government of Ghana and private sector stakeholders to implement and be compliant with the World Trade Organization’s Agreements on Facilitation; Sanitary and Phyto-Sanitary (SPS) Measures; and Technical Barrier to Trade; as well as to implement Policies and Programs to Facilitate Trade, Investment and Regional Integration.
About American Chamber of Commerce
The American Chamber of Commerce, Ghana is the representative arm of U.S businesses in the Country and was formally established in 1997 to promote trade and investment between the United States of America and the Republic of Ghana. Its main objective is to contribute to the economic development of the country through the creation of a vibrant private sector. The Chamber is also affiliated to the U.S Chamber of Commerce, which is the world’s largest trade association with over three million members and 117 affiliate chapters around the globe.
Accra, January 31, 2017
AMERICAN BUSINESSES IN GHANA EXPLORE WAYS OF ENGAGING NEW GOVERNMENT
The American Chamber of Commerce Ghana held its first business meeting for 2017 on Tuesday, January 31, discussing how businesses can better engage with the government to help improve the business environment in the country.
On the theme “How Businesses can better engage with the new Administration”, the meeting was attended by about 112 business people, mostly members of the American Chamber of Commerce as well as representatives of the European Business Organization and officials of U.S Embassy in Accra.
The guest speaker for the meeting, Mr. Kwame Pianim, the retired CEO of New World Renaissance Securities Ltd, who is also an economist/politician, indicated in his speech that “there seems to be a genuine call on Business for collaboration in a well articulated action plan in the 2016 election manifesto of the new government, there is the desire to get more people to start new businesses and encourage existing businesses to make new investments, to grow and expand”
In his opening remarks, the President of the American Chamber of Commerce Ghana, Mr. Joe Mensah said that “U.S businesses where ready to engage with the new government, to improve the business environment and facilitate more U.S investment in the country to create jobs and contribute to the economic development of Ghana”
Today’s meeting forms part of a series of monthly meetings to be held by the Chamber with support from the U.S. Government’s Trade Africa Initiative. Trade Africa is a US Government Initiative to strengthen the U.S. relationship with Africa in order to significantly expand U.S.–African private and public sector collaboration to increase trade with and within Africa. The American Chamber of Commerce, Ghana is the representative arm of U.S businesses in the Country and was formally established in 1997 to promote trade and investment between the United States of America and the Republic of Ghana. Its main objective is to contribute to the economic development of the country through the creation of a vibrant private sector. The Chamber is also affiliated to the U.S Chamber of Commerce, which is the world’s largest trade association with over three million members and 117 affiliate chapters around the globe.