The Vice Chair of the New Patriotic Party (NPP)’s Manifesto Committee, Kojo Oppong Nkrumah, has announced that starting in 2025, import duties will no longer be referenced in dollars but will instead be based on the cedi with a predictable, flat rate.
Speaking on Joy News’ PM Express on Monday, he stated that the incoming government under Dr Mahamudu Bawumia intends to simplify the current tax system by moving away from dollar-referenced duties.
“Because it’s dollar-referenced, it fluctuates. That’s what we are moving away from—being able to give you a simple, basic cedi-based and flat rate,” he explained.
The Housing Minister highlighted the issues businesses face with the current system, noting that the lack of clarity and predictability often leads to tax evasion.
“One of the problems with taxation is when people can’t find some clarity and predictability, and therefore resort to a lot more tax evasion, instead of even at best, tax avoidance,” he said.
During the NPP’s engagement with the business community, they found that the current taxation system has become more cumbersome due to recent modifications meant to address economic challenges.
To counter this, Oppong Nkrumah shared the NPP’s proposed changes: “Our leader is promising three things. Number one, import duties will be cedi-based and flat rate, so you have predictability.
“So if you’re bringing in a container of spare parts, you know that a container of spare parts is going to require a duty of GH¢50,000 beforehand.”
He further explained that the new system would eliminate the uncertainty businesses face under the current method, which is calculated based on CIF dollar value.
“Today, the system is that it will come in at CIF dollar value, and then they will do the calculations on it. So sometimes you are not sure, and there’s very limited predictability,” Oppong Nkrumah noted.
The Ofoase Ayeribi MP pointed out that neighbouring Togo, which uses the CFA franc, enjoys more stability and lower rates due to the predictability of their currency.
He argued that Ghana must adopt similar measures to stay competitive.
On VAT, Oppong Nkrumah mentioned that Dr Bawumia plans to simplify the VAT system by collapsing the current spread into a single flat level that will be input and output deductible.
He contrasted Ghana’s progressive tax system with that of Estonia, where a flat rate system is employed.
“In Estonia and a few other countries, they have a flat rate. Your income tax is 15%—there’s no corporate tax. Income tax is maybe 15%, so no matter what you are earning, you have clarity in doing your tax returns.”
He concluded by stating that simplifying the tax structure into a flat rate could significantly reduce tax evasion and broaden the tax net, bringing more people into compliance.
Source:dailygossipsonline.com