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Business News of Tuesday, 20 December 2016

Source: citifmonline.com

Abolish 15 percent capital gains tax – GSE to NPP

The Ghana Stock Exchange (GSE) has impressed on the incoming NPP government to abolish the capital gains tax when it finally assumes power in 2017.

According to managers of the market, the continuous imposition of the tax is a disincentive for investors and has also adversely affected the market.

“Our particular worry is that even within West Africa, Nigeria has capital gains at zero likewise does Cote d’Ivoire which is the market for the eight Francophone West African countries and there are many African states which also have the same zero capital gains tax,” Managing Director of the Ghana Stock Exchange Kofi Yamoah told Citi Business News.

Gains on investments from the capital market were tax free with the establishment of the Ghana Stock Exchange.

However the new 2015 Income Tax Act by the Ghana Revenue Authority (GRA) which took effect in January 2016 introduced a 15 percent tax on gains made from the capital market.

There have been several agitations to get the tax scrapped.

Industry players have argued that the development has made it unattractive for new investors to come onboard to increase the activities on the local bourse.
Already, the NPP administration is expected to completely abolish five taxes and review downwards, five others upon assuming governance.

The party argues that the imposition of taxes have rendered businesses uncompetitive and equally affected their contribution to GDP.

But the Managing Director of the Ghana Stock Exchange, Kofi Yamoah tells Citi Business News Ghana’s stock market could be more competitive if the 15 percent capital gains tax is abolished.

“If you go back to that scenario where our neighbouring countries are charging no taxes on their capital gains, then we are becoming uncompetitive even in West Africa and that is the worry for us in addition to the fact that we want the retailers to patronize this market and one way that we can achieve is to return to the status quo where capital gains were not taxed.”

The GSE is however projected to end the year in a negative growth due to the impact of the macro-economic conditions on the performance of companies on the stock exchange.