By John Kelly
The minority in Parliament has vehemently condemned government’s decision to approve $832 million tax waiver on a $1.5-billion port expansion project, which is being undertaken by Meridian Port Services (MPS) Limited.
Following the waiver, the company is now exempt from corporate income tax for 10 years and a reduced corporate tax of 15 per cent after 10 years for five years. It will also be excluded from paying tax on dividend to shareholders for 20 years.
The concession covers value added tax, national health insurance levy, customs duties, corporate and withholding taxes among others. But opposition legislators have condemned the deal as a bad one, as there were “too many giveaways”.
Legislator Assibey Yeboah said there was no logic in giving a 55 per cent waiver on a project where the country holds only 30 per cent shares.
“Meridian Port Services are investing $1.5 billion and we are giving them $832 million, which means for each dollar they invest, we give them a tax waiver of 55 per cent,” he said.
He added: “The National Fiscal Stabilisation Levy, a levy that was brought in to stabilise the economy, banks pay it, telcos are paying it, and breweries are paying it, so why should we exempt MPS from paying it? We are also exempting them from paying the NHIS [national health insurance scheme] levy, are their workers not going to benefit for the NHIS?”
Reacting to the opposition, the Parliamentary Finance Committee Chairman, James Avedzi defended the waiver as necessary to ensure the whole credit facility was made available for the execution of the Tema port expansion project.
He also argued it was imperative to sustain attractiveness of the project to financiers, MPS and other investors and to make sure government did not suffer additional costs.
The waiver is on materials and equipment including other related taxes for the finance, design, construction, equipping and operation of the project.
The government had asked legislators to approve $982 million waiver, but the finance committee trimmed it to $832 million, an amount some lawmakers viewed as still too much.
Finance deputy minister, Mona Quartey said strategic investments, in excess of $50 million, qualified an investor for tax concessions under the law.
She said the tax concession was to ease investment risk and sustain the attractiveness of the project to the financiers and major players.
The MPS is a joint venture between Ghana Ports and Harbours Authority and Meridian Port Holdings Limited, which is in turn a joint venture with Bolloré Group and APM Terminals, as the two main shareholders, according to information from the company’s website.
The port of Tema handles approximately 70 per cent of Ghana’s sea freight traffic. It also serves as a gateway for landlocked countries Mali, Niger and Burkina Faso. The tax waiver was finally approved by Parliament last week.
