By Ibrahim ASARE

The Ghana Income Tax Act, 2015 (Act 896), updated over time, employs a combination of lower tax rates, short-term exemptions, faster depreciation claims, support for losses, and foreign tax offsets to encourage investment in sectors offering significant societal advantages. Most of these benefits are outlined in the First and Sixth Schedules, complemented by relevant provisions regarding allowable expenses, asset write-offs, and carrying forward of losses.

If applied consistently and supported by appropriate infrastructure and expertise, these benefits can lower the cost of financing, boost exports, drive local manufacturing growth, and generate employment opportunities. However, they may lead to loss of tax revenues unless behaviors improve through effective management. The purpose of this paper is to outline key incentives along with legal provisions, followed by presenting insights, summaries, and suggestions aimed at decision-makers and those investing in the region.

The legal framework of incentives under Act 896

Section 896 structures its reward system across four areas, specifically:

1. 
   Charging provisions and exemptions:
   
   The legislation outlines the taxable amount and subsequently excludes specific items from this base according to Section 7 of Act 896.
2. 
   Differential corporate rates:
   
   The initial schedule establishes the standard corporate tax rate and outlines reduced rates for particular industries and regions, including
   
   Hotels, unconventional export items, production activities located away from large urban centers, and businesses operating within free zones following their period of tax exemption
   
   .
3. 
   Temporary concessions:
   
   The Sixth Schedule provides temporary benefits for specific operations including;
   
   Agricultural processing, rural banks, waste management, certified affordable housing, approved collective investment schemes and unit trusts, venture capital financial institutions, and free zone businesses during their introductory period
   
   .
4. 
   Tax deductions, asset recapture, and loss adjustment:
   
   Paragraphs covering maintenance, innovation and development, investment deductions, and deficit transfer lower actual tax liabilities during the initial phases of initiatives and assist companies in handling fluctuations.

• 
  List of key benefits and their locations within the legislation
  

Lower company tax rates listed in the First Schedule

The initial schedule lowers the corporate tax rate for certain operations and regions that the government aims to promote.

1. 
   Standard company rate
   
   The corporate income tax rate of 25% serves as the standard for evaluations.
2. 
   Hotel Industry
   
   A lower corporate tax rate
   
   22%
   
   pertains to revenue generated through hotel business activities.
3. 
   Non-traditional exports (NTEs)
   
   Taxation on chargeable income derived from eligible non-traditional exports occurs at an lowered rate of 8%.
4. 
   Manufacturing by location
   
   Manufacturing firms based outside Accra and Tema enjoy a discount ranging from 25% to 50% off the standard tax rate.
5. 
   Facilitating financial services for key industries
   
   The timetable acknowledges revenue generated from loans provided to agricultural businesses and leases of productive assets by financial organizations as being subject to a tax rate of 20%.
6. 
   Holiday-Free Zones
   Zones Without Holidays
   Areas Free of Holiday Restrictions
   Holidays-Exempt Regions
   Regions Not Affected by Holidays
   Zone Exemptions from Holidays
   No-Holiday Designated Areas
   Locations Outside of Holiday Rules
   Territories Unrestricted During Holidays
   Holi-free Zones
   
   Following the initial tax holiday phase, revenue from exports generated by businesses located in free zones is subject to taxation at a maximum rate of 15% for earnings derived from markets beyond the National Customs Territory, and 25% for sales made within the country.

Short-term exemptions under the Sixth Schedule

The Sixth Schedule serves as the foundation for temporary benefits. The Parliament has revised it to adjust which actions meet the criteria and for what duration, as detailed hereafter:

1. 
   Agricultural business.
   
   Farmers involved in agriculture-related endeavors such as growing trees, producing commercial crops, raising animals, and farming aquatic species may qualify for tax exemptions lasting between five to ten years.
2. 
   Agro-processing
   
   Income generated through agro-processing is eligible for a reduced tax rate during the first five years beginning with the onset of commercial operations.
3. 
   Cocoa by-product processing
   
   . Equivalent approaches promote investments that utilize cocoa shells, husks, and additional by-products to create fertilizers, livestock feed, and energy-related items.
4. 
   Rural banking
   
   Rural and community banks gain advantages through a 10-year initiative designed to enhance financial access and encourage the pooling of rural funds.
5. 
   Waste processing and recycling
   
   A 7-year grant assists companies that transform waste into resources or power and prevent garbage from being sent to landfills.
6. 
   Low-cost housing
   
   . Companies certified to build affordable housing are eligible for a five-year tax break, and the legislation also promotes homeownership via particular benefits not covered under the corporate taxation framework.
7. 
   Young entrepreneurs.
   
   A young entrepreneur’s earnings derived from ventures in manufacturing, information and communication technologies, agro-processing, energy generation, waste management, tourism, creative industries, horticulture, and herbal medicine will remain tax-free for five consecutive years.
8. 
   Authorized collective investment schemes and open-end funds
   
   A permit for recognized collective investment vehicles lowers the tax burden on aggregated local savings and promotes growth in the capital market.
9. 
   Venture capital financing companies
   
   A 10-year concession with customized loss regulations acknowledge the significant fluctuations and long-term investment characteristics inherent in venture financing.
10. 
    Employment of fresh graduate
    
    Businesses that hire new university or college graduates are eligible for an extra tax reduction on salaries and wages paid throughout the year to a recent graduate from an approved Ghanaian higher education institution.
11. 
    Enterprises and developers operating within Free Zones during the holidays
    
    Free zone enterprises usually receive an early period of tax exemption as outlined in the Sixth Schedule, following which the rates specified in the First Schedule come into effect. The government outlines the criteria and transitions them to a 15% export tariff and a 25% local rate.
12. 
    Individuals and companies involved in importing and producing goods subject to taxation.
    
    A supplier or producer of taxable products may receive expedited depreciation within two years when installing machines and devices brought into the country for enforcing the Excise Duty Sticker Regulation.
13. 
    Private universities
    
    
    .
    
    Private universities will be tax-exempt provided they reinvest 100% of their post-tax profits back into the institution.
14. 
    Authorized automobile producers and assemblers participating in the Ghana Automotive Manufacturing Development Programme
    
    are eligible for benefits that vary between 3 to 10 years.

Allowances for capital expenditures and tax reliefs related to losses that function as motivators

1. 
   Maintenance and upgrades; Research and Development (R&D)
   
   The legislation permits deductions for maintenance expenses and for research and development activities aimed at generating revenue from business operations, provided they meet standard criteria. These rules reduce the expense associated with innovation and property management.
2. 
   Capital allowances
   
   Section 14 along with the Third Schedule provides capital allowances based on asset categories or pools. The accelerated cost recovery method lowers taxable income during initial years and can significantly enhance project cash flows.
3. 
   Loss carry-forward
   
   Section 17 allows companies to transfer unrecovered losses to future periods.

\xa0International and structural relief

1. 
   Foreign tax credit
   
   Residents can offset foreign income taxes against their Ghanaian tax obligations on income earned abroad, subject to legal restrictions. This helps prevent double taxation and encourages the international growth of Ghanaian companies.
2. 
   Reorganisations and rollovers
   
   Act 896 includes carvings that permit tax-free mergers, combinations, and specific asset exchanges when continuity requirements are satisfied. These provisions minimize the tax obstacles associated with restructuring and upgrading.

Findings

1. The system operates based on established guidelines and is mostly automated. Many benefits are embedded within schedules that specify rate structures, industries, and duration constraints. This minimizes flexibility and enhances certainty for investors meeting the requirements.
2. Temporary exceptions prevail, which constitutes sound procedure. The Sixth Schedule is subject to a fixed duration. Parliament has modified it via amendment acts instead of temporary waivers, enabling regular assessment and expiration.
3. The incentive framework corresponds to public interests. Activities such as agro-processing, non-traditional exports, local manufacturing, rural banking, waste management, affordable housing, private equity, and mutual fund operations have well-defined spillover effects. The legislation directs support towards these areas instead of providing general tax exemptions.
4. Spatial incentives hold importance but are not enough by themselves. The difference in corporate tax rates beyond Accra, Tema, and regional capital cities is considerable. In reality, investors continue to encounter challenges related to land development, utility provision, and transportation that may surpass the benefits of a reduced rate without aligned policies.
5. Capital recovery regulations support investments. The mix of deductible research and development expenses, repair costs, and capital allowances leads to better initial cash flow, which is typically when projects face the most financial pressure.
6. Loss provisions are specific yet intricate. Tracking carry-over periods, alignment rules, and their connection to minimum taxable income may perplex taxpayers.
7. Free Zones are included under Act 896, featuring a defined post-holiday framework. The regulations and guidelines clearly outline the shift to the 15% export tax rate following the holiday period, while local sales remain subject to the regular tax rate.

Conclusions

To sum up, Act 896 embodies the key features of a contemporary, development-focused reward mechanism. The First Schedule implements specific tax reductions, whereas the Sixth Schedule offers temporary benefits.

This is a logical, investor-friendly plan that focuses on initiatives offering broader benefits. When it comes to areas where industrial space, consistent electricity, water supply, ease of trading, standard infrastructure, and skilled labor are limited, taxes alone won’t significantly influence investment choices. To encourage factory relocation, industrial zones must be properly equipped and well-linked.

Recommendations

\xa0For policymakers

1. 
   Issue an yearly report on tax expenditures
   
   List every entry in the First and Sixth Schedules, including recipients, expenses relative to income, and outcomes like employment opportunities, foreign exchange gains, quantity of waste handled, or amount of affordable housing constructed. Link renewal or expiration based on achievement.
2. 
   Unify official instructions regarding the First and Sixth Schedules
   
   Update and compile current guidelines from the Ghana Revenue Authority (GRA) regarding lower tax rates, production incentives based on location, support for non-conventional exports, transition into free zones, and assistance for losses in key sectors.
3. 
   Make spatial incentives “plug-and-play”
   
   . Isolate the location-specific tariff for service areas. Develop a uniform package wherein a business that agrees to operate in a qualifying region gets the reduced rate along with assured utility access, faster permits, and standardized land paperwork within a set timeframe.
4. 
   Reinvigorate initiatives and collective-saving rewards to enhance focus and structure
   
   Maintain the provisions of the Sixth Schedule for venture capital finance firms and registered mutual funds, yet mandate clear disclosure regarding fund allocation and developmental impacts, ensuring benefits foster growth in tangible assets instead of speculative transactions.
5. 
   Develop a well-defined strategy for transitioning into a free zone
   
   Create a list to review at the conclusion of the holidays, including tracking of combined services, distribution of shared expenses, and records required for the 15% export tax rate and 25% local tax rate.

\xa0For investors and advisers

1. 
   Begin with a legal checklist
   
   . Align your project with the First and Sixth Schedules and identify the applicable concessions. For every requested benefit, collect relevant documents such as start-up dates, certificates for affordable housing, definitions related to agricultural processing, and proof of export eligibility.
2. 
   Optimise capital allowances
   
   . Ensure assets are accurately categorized according to the Third Schedule and keep an up-to-date fixed-asset ledger that records groups, new acquisitions, and disposals.
3. 
   Model loss utilisation early
   
   If you anticipate initial losses, conduct simulations that include the five-year loss carry-forward and how it interacts with the minimum taxable income, then structure your funding and dividend strategies accordingly.
4. 
   Locate with intent
   
   If you have the capability to function beyond Accra, Tema, and regional capital cities, compare the location-specific rates alongside the dependability of logistics and utilities.
5. 
   Get ready for Free Zone sunrises
   Be prepared for Free Zone evening skies
   Anticipate the beauty of Free Zone dusk
   Expect stunning views during Free Zone sunset hours
   Gear up for breathtaking moments at Free Zone sunsets
   Welcome the enchanting scenes of Free Zone twilight
   Experience the magic of Free Zone golden hour
   Look forward to mesmerizing Free Zone sunsets
   Embrace the serene atmosphere of Free Zone evenings
   Enjoy the picturesque landscapes of Free Zone as day turns to night
   
   . Time flies by in ten years. Incorporate the 15% export rate and 25% local rate into your pricing calculations.
6. 
   Be cautious when using foreign tax credits
   
   For expanding into new regions, Ghanaian companies should monitor income from overseas sources and maintain proper records to ensure tax credits are claimed effectively while adhering to legal boundaries.

My Opinion\xa0

In my view, Ghana doesn’t require an expanded list of tax benefits to encourage investment. The provisions under Act 896 offer the essential framework needed to drive economic growth.

The first schedule highlights key areas for investment, whereas the sixth schedule provides emerging sectors with opportunities to develop. Additional provisions regarding exemptions, depreciation allowances, and loss reliefs help ease initial tax burdens during periods of limited liquidity.

In order to leverage these legal instruments for expansion, the government must emphasize openness, adhere strictly to time-limited policies, and implement non-tax related support measures. Meanwhile, investors ought to approach qualification criteria and paperwork with the same level of precision as they do when handling funding and technical aspects. If executed effectively, the current system can encourage private investments to focus on export activities, environmentally friendly initiatives, balanced regional development, and employment opportunities of superior quality, all while maintaining a consistent revenue stream through taxation.

Various intriguing taxation issues will be discussed by tax professionals, tax authorities, taxpayers, policymakers, and other important participants within the country and internationally during the upcoming Annual International Tax Conference organized by The Chartered Institute of Taxation Ghana, scheduled for 20.

^th

-22

^nd

The event will take place in August 2025 at the Alisa Hotel in Accra. Everyone is welcome to participate in the conversation about effective ways to increase tax income without undermining efforts to attract investments.

This piece reflects my individual and occupational viewpoint as a tax specialist carrying out my responsibilities as a citizen striving for Ghana’s prosperity, and it does not represent the stance of any organization.

The writer holds the designation of Chartered Tax Practitioner – being a member of ICAG and a member of the Chartered Institute of Taxation Ghana.

ibasare@gmail.com


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ibrahim@ibasare.com

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@ib_asare;


0244 423 960

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