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Business News of Friday, 25 November 2016

Source: B&FT

FDI steers clear of agro-processing despite generous tax incentives

Out of some 46 new Foreign Direct Investment (FDI) projects recorded in the third quarter of the year, valued at US$241.17 million, none was in the area of agriculture and agro-processing, in spite of generous tax incentives offered through the Ghana Investment Promotion Centre.

The CEO of the GIPC, Mawuena Trebarh, has been urging foreign investors to look at the incentives the Ghana Income Tax Law offers for agriculture and agro-processing, and invest more in the area.

There are a number of tax incentives designed to attract investment to the sector, which continues to struggle even as investment in other sectors of the economy is soaring.

Under the GIPC Tax Regime and Investment Act, investment in agricultural activities, such as cattle ranching, attracts just one percent tax for 10 years; tree cropping (example: coffee, oil palm, shea-butter and coconut) also attracts just one percent tax for 10 years.

Livestock, poultry, fish farming and cash crops also attract just one percent tax for a five-year period. In the same vein, agro-processing – converting fish, livestock, into edible canned products, also attracts one percent tax for a period of five years.

This, Mrs. Trabarh argues, is purposely done to show the premium government places on agriculture as a way of promoting national development.

“Agriculture and agro-processing are high on the development agenda,” Mrs. Trebarh told the B&FT in an interview.

“We all know that about 60percent of the population are involved in some form of agriculture, and so it is important that we allow our legislation to evolve to the point where existing tax codes can embrace that development agenda,” she stated.

“Major investments in agriculture and agro-processing will be attracted if we take a decision that we want certain kinds of investors who understand our desire to increase jobs, to improve technology, enhance farming methodology, and bring new models into integrating farming communities into the investment programmes,” she said.

“So, our aim is to highlight the incentives that are available in our tax code under the GIPC Act so as to attract investors to the agric sector.”

A total of 1504 jobs are expected to be created from the 46 newly registered projects at full capacity, which are in the areas of building and construction, export trade, general trading, liaison, manufacturing, services, and tourism.

This brings the total number of projects registered from January to September this year to 136, valued at US$1,940.86 million.

A total of 8,103 jobs are expected to be created from the 136 projects.

Out of the 46 projects registered during the third quarter, 34 (73.91percent), were wholly-foreign owned enterprises, valued at US$59.68 million, representing 24.75 percent of the total estimated value of projects registered.

The remaining 12 (26.09percent) were joint ventures between Ghanaians and foreign partners valued at US$181.49 million which is 75.25percent of the total estimated value of projects registered.

Again, a total of ten Ghanaian projects were registered during the third quarter of 2016. The Greater Accra region registered seven out of the total number, followed by the Ashanti Region with two and trailed by the Eastern Region with one.