Accra: Finance Minister Dr Cassiel Ato Baah Forson has revealed plans for the Ghanaian government to review and tighten tax incentives for the local vehicle assembly industry, following findings of significant misuse of these exemptions over the past five years.
According to Ghana Web, Dr Forson shared in an interview on Citi FM that while the government is committed to supporting authentic vehicle assembly operations, it aims to eliminate loopholes that have allowed certain importers to inappropriately benefit from tax exemptions. He explained, "We did give them a rebate for, I think, five years. After review, we noticed that it has been grossly abused."
The Finance Minister pointed out that the misuse is linked to interpretations of provisions regarding semi-knocked down (SKD) and completely knocked down (CKD) vehicle imports. Dr Forson highlighted cases where importers have brought in cars with minimal modifications, claiming them as knocked down to qualify for tax relief.
"The law mentioned semi-knocked down and completely knocked down. Some bring in cars without a steering wheel and claim they are knocked down and that they are entitled to a tax exemption," he noted. Furthermore, some vehicles were imported missing only minor components, such as wheels and tyres, to unjustly qualify for VAT exemptions.
Dr Forson emphasized that the government intends to cease such practices. "Government felt that the abuse cannot continue. Clearly, we want to review that law and tighten it to cover genuine semi-knocked down and completely knocked down vehicles," he stated. The primary goal is to ensure that incentives serve legitimate manufacturers without undermining the automotive assembly industry in Ghana.
Recognizing the challenges in local vehicle manufacturing, Dr Forson acknowledged that even countries with established vehicle industries rely on imported parts. He assured that the government would collaborate with industry stakeholders to establish clearer regulations that prevent abuse while fostering genuine assembly operations. "We will actually work with them so that we can clean the sector and bring it back," he added.