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Business News of Friday, 24 November 2000

Source: Graphic (Lloyd Evans)

Listed companies to enjoy tax relief

LISTED companies on the Ghana Stock Exchange (GSE) are to enjoy a corporate tax relief under the new income tax law.

The law which has been approved by Parliament and awaiting Presidential assent is expected to come into effect on January 1, 2001.

Under the Internal Revenue Bill, the GSE has been granted various tax incentives which are intended to help deepen the growth of the exchange.

The GSE has been granted an additional five years tax exemption. This brings to 15 years the period of tax exemption for the GSE.

Companies also listed on the exchange have now had their corporate tax reduced to 30 per cent as against the corporate tax of unlisted companies which previously stood at 35 per cent.

Corporate tax of unlisted companies with effect from next year will stand at 32.5 per cent.

This means that listed companies will now pay lower taxes than other companies by 2.5 per cent.

On capital gains tax, securities of companies listed on the exchange has also been excluded from chargeable assets for an additional five years.

The reliefs which are expected to help boost up more listing of companies on the exchange has come at a time when the exchange was preparing to celebrate its 10th anniversary.

The fourth relief which bothers on the 10 per cent withholding tax on dividends did not, however, go through.

Notwithstanding the disapproval of the fourth request, the three other reliefs are expected to give the exchange a new lease of life with more companies taking advantage of the relief to be listed on the GSE.

These reliefs will also level the investment playing field so that rational investors will not continue to put their savings away from the stock exchange.

The GSE which came into operation in November 1990 currently has 22 listed companies with an average daily trading volume not exceeding 50,000 shares.

The 10th anniversary celebration which will be celebrated under the theme; “Capital Market - The way forward for economic development”, will focus on promoting the activities of the exchange.

The exchange through its modest operations has pioneered the development of the country’s capital market and has successfully served as an important pivot for capital mobilisation.

The exchange has come as a symbol of the country’s commitment to run a market-oriented economy, reform the financial sector and use the private sector as the engine of economic growth.

The period of 10 years of stock market operations has put the economy on the map of the world’s financial markets.

In 1994, the exchange was voted as one of the best emerging markets. It was again voted as one of the best performing market in Africa in 1998.

Through initial public offerings and other primary market activities, long-term capital of over ?160 billion had been raised while at the same time provided liquidity to portfolio investors.

The founding Chief Executive Officer of the Exchange, Mr Yeboa Amoa in a statement on the occasion saluted the government for passing the Internal Revenue Service Amendment Bill and expressed the hope that when it becomes operative, it will enhance the operations of the market.

He said under the aegis of the Securities and Exchange Commission, the exchange will renew its commitment to uphold the integrity that has characterised its operations in the past.

The Chief Executive stated that the exchange will strive and make more impact on private sector development by assisting the sector to mobilise long-term capital.