Government is ramping up efforts to tighten its tax exemptions regime, aiming to plug longstanding revenue leaks and enhance domestic resource mobilization in the face of dwindling external aid.
This was revealed by Deputy Minister for Finance, Thomas Ampem Nyarko, during a high-level engagement with a visiting delegation from the South Sudan Revenue Authority. The delegation, led by South Sudan’s Deputy Commissioner, is in the country to study Ghana’s tax exemptions framework as part of their policy development efforts.
In his remarks,Mr Ampem Nyarko described Ghana’s exemptions regime as “a major source of revenue loss” and stressed that the government is taking deliberate steps to curb its abuse while maintaining the policy tool’s strategic purpose.
“We are not getting the aid and grants we used to get, and it’s important that we look within to make sure we can raise enough,” he noted.
“Our exemptions regime has been abused, and so we are doing a lot to tighten it up. Government has taken steps to close loopholes and improve transparency around how exemptions are granted and managed.” He added.
Tax exemptions, while not inherently problematic, have become a double-edged sword for many developing economies. In Ghana, these incentives were initially designed to attract foreign direct investment, encourage private sector development, and support socially important sectors like health and education. However, over time, the system has been exploited, often granting waivers without strict justification or oversight.
The Deputy Minister acknowledged this duality, “Tax exemptions themselves are not inherently bad, as they can be necessary policy tools to attract investment and support key sectors. The real problem has been the persistent abuse of the system over the years.”
Ghana’s current reforms seek to strike a balance between protecting the fiscal space and preserving the legitimate use of exemptions to promote economic growth and social development. Measures include stricter vetting procedures, digital tracking of exemptions, and the establishment of a centralized database for monitoring granted waivers.
The South Sudanese delegation commended Ghana’s transparency and willingness to share its experiences of the positive reports on the reforms government is implementing.
This visit not only highlights Ghana’s emerging role as a regional thought leader in fiscal policy reform but also underscores the broader need for African economies to maximize domestic revenue in the face of shifting global financial dynamics.
