Parliament approves US$3.1 million VAT exemption

Parliament has approved a request to waive Domestic VAT totalling US$3.1 million on local purchases and services in the rehabilitation and upgrading of equipment in Technical Universities, Polytechnics and Technical and Vocational Training Centres.

The request for the VAT exemption complies with the Concessional Loan Agreement between the Government of Ghana and the Export-Import Bank of China.

Dr Mark Assibey-Yeboah, Chairman of the Finance Committee presenting the Committee’s report on the Floor of Parliament indicated that Parliament had in July 2018 approved by a resolution the Supplementary Contract Agreement Nos. 1&2 as

well as the Commercial Contract between the Government of Ghana, acting through the Ministry of Education and Messrs AVIC International Holding Corporation of China for the implementation of the project.

Following that, the House on 5th April 2019, approved by resolution of the request for the waiver of Import Duties, VAT, GETFund, Import NHIL, Special Import Levy, EXIM Levy, AU and ECOWAS levies amounting to US$26,966,083 on project materials and equipment to be procured under the Polytechnic, Technical and Vocational Training Centres upgrading project.

He said the resolution for the tax exemption approved by Parliament covered only imports contrary Clause 2 of the Supplementary No1 of the Commercial Contract Agreement. He said the present request thus seeks to include Domestic VAT on local purchases and services in the taxes to be waived in connection with the project.

Dr Assibey-Yeboah also stated that the project aims to rehabilitate and upgrade the facilities and equipment of Technical Universities, Polytechnics and Technical and Vocational Training Centres in Ghana.

The goal of the project is to improve the employability of Ghanaian youth by providing them with the relevant skills and competencies required for self and formal employment.

This is with the view not only to help reduce unemployment and further among the youth but to also help encourage indigenous entrepreneurship and further provide Ghanaian industries with the relevant manpower to make them globally competitive.

Dr Assibey-Yeboah further noted the Committee thoroughly considered the request and finds the approval to be necessary for the timely and smooth implementation of the project.

He said in view of the anticipated benefits that the educational sector stands to gain from the implementation of the project, the Committee recommends to the House to adopt the report and approve by resolution.

Ras Mubarak, Member of Parliament (MP) for Kumbungu lauded the project and stated that it would go a long way to help boost education in the country.

He said governments over the years have not paid much attention to technical and vocational education and thus urged the House to support every effort to upgrade, rehabilitate and refurbish these institutions for the students who attend them.

“Mr Speaker, if you visit any of the technical and vocational institutions across the country, they are an eye-sore. A lot of them do not have the equipment, a lot of them do not have adequate facilities to ensure that the students we are churning out from these institutions are getting the necessary practical training.”

He expressed the hope that the support being provided would go a long way to help the students in these institutions. Dr James Klutse Avedzi, Deputy Minority Leader expressed concern about the large amount of money that is given out as tax waivers to companies and institutions which could have been used for development.

He reiterated the call on the Finance Minister to bring policy on tax waivers to the House as he promised the legislature. “I have raised these issues several times. We don’t know what is happening about this policy,” he added.

Dr Avedzi also stated that government policy on waiver would inform the House on the direction and how to go about it. “If we have a policy on how to handle waivers, we will then know from day one how to go about it. We do not know whether what we contribute here or debate on the floor of the House is taken on board

by the Finance Ministry whenever they are doing their negotiations for loan agreements” he said. Mr Osei Kyei-Mensah-Bonsu, Majority Leader, backed the call to have a policy on tax waivers which he said had been a longstanding issue in the House.

He stressed the need for the Finance Committee to probe into the regime of tax waivers and advise the House on it. “We need to probe into the regime of tax waivers… it’s been with us. We as a House and indeed the Finance Committee has the charge to probe into this and advise the House” he added.