Parliament has approved the waiver of taxes and duties of $23.98 million for Platinum Properties Limited, a special purpose vehicle (SPV) owned and controlled by Inter-Afrique Holding Limited and the Ghana Infrastructure Investment Fund (GIIF).
The amount translates into about GH¢134 million.
The approval will allow the entity to enjoy tax rebates on import duties, Value Added Tax (VAT), National Health Insurance Levy (NHIL), GETFund levy on all its imports, domestic VAT, domestic NHIL and domestic GETFund levy on materials, plant and machinery and equipment to be procured by the company.
The materials are to be used by Platinum Properties for the Pullman Accra City Hotel and Serviced Apartments, a dual hospitality project that will become Ghana’s largest and most distinguished hotel facility.
Motion
The motion for request for the tax and duties waiver was moved by the Chairman of the Finance Committee, Dr Mark Assibey-Yeboah, and seconded by the Member of Parliament (MP) for Ofoase-Ayirebi, Mr Kojo Oppong Nkrumah, on February 18, this year.
Expected benefits
Tabling the report of the Finance Committee on the tax and duties waiver for Platinum Properties in the House on February 18, 2020, Dr Assibey-Yeboah said the Ghana Investments Promotion Centre (GIPC), in consultation with other relevant government agencies, had reviewed the Pullman Accra City Project and approved same as a strategic investment.
He said the $126-million multi-purpose facility would be the country’s first international branded and managed serviced apartment units, which would make the Airport City development enclave Accra’s most preferred hotel destination.
“This will augment the aviation industry and help attract more high-profile business meetings and social visitors into the Ghanaian capital,” he said.
Job creation
Dr Assibey-Yeboah explained that the committee observed that the implementation of Phase One of the project was expected to generate substantial amounts in taxes for the government over the initial period of operation.
“It is estimated that annual revenues for Pullman Accra Airport City will be in excess of $550 million over the first 10 years of operation. The government will make an estimated VAT of $90 million and $26 million in corporate taxes over this period.
“Again, there will be employment of about 250 direct hotel staff by Pullman, implying that the Ghana Revenue Authority (GRA) will increase government revenue through employee pay-as-you-earn (PAYE) and social security contributions estimated to aggregate about $10 million,” he said.
Strategic investors
The Finance Committee Chairman, who is also the MP for New Juaben South, named some investors who had been granted strategic investor status and given benefits, including tax exemptions/waiver, by former President Mahama on April 29, 2015 during the era of the National Democratic Congress (NDC).
They were Ghacem Limited, Dream Realty Ltd, Garden City Mall Ltd, Boston Investments Ltd, Shoprite Ghana Pty Ltd, Vincien Sugar Refinery Ghana Ltd, Dzata Cement Ltd, Ecobank Ghana Ltd and Ciments de L’Afrique Ghana Ltd.
“Further, on January 7, 2016, the President gave approval for strategic investor status and tax exemption for other companies, including Wilmar Africa Ltd, West Hills Ltd, Tang Palace Hotel Ltd, Mabani Seven Company, Sunon Asogli Power Project (phase II) and Quantum Power Ghana Gas Ltd,” he added.
Free tax breaks
Dr Assibey-Yeboah pointed out that the committee noted that previously, tax incentives and waivers granted by the GIPC to approved strategic investors were not presented to Parliament for approval.
He, however, said the Attorney-General and Minister of Justice, on May 4, 2018, advised that while the Finance Minister had the constitutional mandate to grant tax exemptions, the application for tax exemption must be submitted to the GIPC, subject to parliamentary approval, through the Finance Minister, in accordance with the provisions of Article 174(2) of the Constitution.
President has not granted any tax waiver
Seconding the motion by the Chairman of the Finance Committee, the Minister of Information, Mr Kojo Oppong Nkrumah, denied reports that the President, on his own, had granted tax waiver to Platinum Properties Ltd.
“Mr Speaker, as we start this debate process, if, indeed, the President has granted, suo moto, a tax waiver, there will be no need for Parliament sitting and having this conversation.
“The process we are going through this afternoon shows clearly that all that commentary thrown into the public domain that the President has granted tax waiver to a company is not true because, in accordance with the Constitution, no President, on his own, has the power to grant tax waiver to a company,” he said.
Unprofitable venture
The MP for Yapei Kusawgu, Mr John Jinapor, argued that there was no evidence to prove that if the project was implemented, it would be profitable.
“If you want to inject GH¢134 million of Ghanaian taxpayers’ money into a private venture, you ought to do an investment appraisal, convince Parliament and let Parliament know that it is worth doing before you inject that money,” he argued.
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