President of the Ghanaian-German Economic Association (GGEA), Stephen Antwi, has cautioned against the over-taxation of businesses operating in the formal sector, as this could have dire implications for the country’s business competitiveness and force foreign businesses to leave the country.
He lamented the aggressive stance that the Ghana Revenue Authority (GRA) has taken in recent times in its clamp down on businesses that it deems non-Value Added Tax (VAT) compliant, and its attendant invigilation exercise.
He stated that although government needs revenue to operate, the focus on already established and registered business entities could be detrimental to the overall growth of the economy.
Mr Antwi therefore advised the tax authorities to “widen their net, instead of always seeking to deepen it,” to bring in operators in the informal sector.
He stated that the formal sector has become an easy target for GRA, who are unrelenting in going after them and in many instances, inconveniencing these businesses.
He said, “We are willing to support the government and pay our fair share of our taxes to support the government to generate enough to attain its development goals, but others must also be involved.”
The GGEA President advised the tax authorities to focus attention on the masons, carpenters, labourers, painters, and other informal employees whom they could tax to broaden the tax base.
He said, “Everywhere you turn in this country, it’s like a huge construction zone. It needs some effort, but they are there.”
He made this call on the sidelines of the GGEA’s forum under the theme, ‘Doing business with Germany.’
The forum was meant to bring together businesses across various fields to interact with the German Embassy, Represented by the German Ambassador, Mr Daniel Krull, and the German Agency for International Cooperation (GIZ) on how they could break into the German Market with their products.
Mr Krull advised local exporters to consider forming partnerships to enable them break into the German economy, as the major issue faced by Ghanaian companies when they enter the German market is the issue of scale.
He said, “There’s one issue with Ghana. It’s not an issue of quality, but quantity. If these companies engage with you, then they want more volumes. Which many individual companies cannot provide.”
He also advised Ghanaian businesses to have a rethink of how they view their operations, to a broader aspect which incorporates the wider West African business community, as the Ghanaian market as it is too small for German the operators.
He said, “from the perspective of the German company, the Ghanaian market is too small. Most of the providers look for the larger market. Trying to offer this market from Abidjan to Lagos, will make this market more attractive, than only Accra.”
He also advised the entrepreneurs to focus on industries to expect to grow over the next decade, to take advantage of this expected growth and demand.
On the issue of Ghana position as an attractive destination for investment, he warned that “it is no longer the case that Ghana is the most sought-after business location in Africa. There are other locations that are offering more opportunities.”
He continued, “it’s not about privilege, it’s about being treated properly,” he said in reference to the recent GRA crackdown on non-VAT compliant companies. He warned that “some companies have decided to leave Ghana and relocate to other countries.”