A Tax law expert and Senior Lecturer at the University of Ghana School of Law, Dr. Abdallah Ali-Nakyea has advised governments of developing and middle-income countries, including Ghana, to review tax exemptions given to investors.
According to him, this move is one of the obvious solutions to the inability of tax systems to yield higher revenues in many developing and middle-income countries.
“Developing and middle-income country governments typically offer various tax exemptions in order to attract investment, which lowers tax revenues. The problem with this practice is that exemptions do not appear to result in higher investment and are, therefore a pure loss of revenues,” he said.
This was disclosed by Dr. Ali-Nakyea in a Ghana Bar Association (GBA) presentation at the ongoing Bar Conference at Bolgatanga in the Upper East Region.
This year’s GBA Conference is on the theme: ENSURING AN INCREASE IN REVENUE MOBILISATION THROUGH TAXATION FOR THE PURPOSE OF ACCELERATED NATIONAL DEVELOPMENT: THE ROLE OF THE LAWYER.
Furthermore, Dr. Ali-Nakyea noted that a major problem associated with exemptions in developing and middle-income countries is that they are used for political reasons, and consequently, risk being linked with corruption.
Alternatively, the tax expert suggested that the introduction of transparency into the system by making exemption rules or by publicizing exemptions can mitigate the negative effects of exemptions.
“If this is politically difficult, the negative effects of exemptions could be mitigated by introducing transparency into the system, either by making rules about exemptions firmly stated in laws and regulations or by publicly disclosing information about exemptions,” he indicated.
Finally, he bemoaned the delay in the passage of the Tax Exemptions Bill 2019, into law.
“This is why the Tax Exemptions Bill 2019 has been a worry for the delay in its passage into law,” he ended.