GRA, Finance Ministry Sued Over $335 Million Tax Waivers . The Ghana Revenue Authority (GRA) and the Finance Ministry are embroiled in a legal battle over the decision to grant tax waivers to 42 companies under the One District One Factory (1D1F) Initiative.
This lawsuit was initiated by three Minority Members of Parliament, led by Deputy Leader Emmanuel Armah-Kofi Buah.
The MPs are urging the Supreme Court to suspend the tax waivers, arguing that they are not in the country’s best interest.
The plaintiffs, Bernard Ahiafor (MP for Akatsi South), Kwame Agbodza (MP for Adaklu), and Emmanuel Armah-Kofi Buah (MP for Ellembelle), claim that the tax waivers violate Article 174 of the 1992 Constitution, rendering them unconstitutional.
They seek a declaration from the Supreme Court that these waivers are null, void, and of no effect.
Bernard Ahiafor emphasized the importance of the Supreme Court’s intervention for the nation’s sake. He stated, “It appears Article 174 of the Constitution is being violated.
The Supreme Court has exclusive jurisdiction to interpret the Constitution. Therefore, any citizen who believes that a part of the Constitution is being contravened can seek interpretation and declaration from the Supreme Court, which is exactly what we have done.
We’re seeking relief against the waivers that are being implemented and those yet to be implemented.”
GRA, Finance Ministry Sued Over $335 Million Tax Waivers: Background on the Tax Waiver
On May 20, the government released a list of companies requesting tax waivers under the 1D1F initiative. In 2021, the Ministry of Finance began the process to secure approximately $335,072,712.13 in tax exemptions for 42 companies involved in the government’s 1D1F initiative.
This move was presented in Parliament by former Finance Minister Ken Ofori-Atta in 2022 as part of the Exemptions Act, 2022 (Act 1083).
Among the companies listed, Sentuo Oil Refinery Limited, a newly established entity, has the highest requested exemption, amounting to $164,633,012.00.
Legal and Economic Implications
The lawsuit against the GRA and the Finance Ministry highlights the ongoing debate about the effectiveness and fairness of tax waivers.
Proponents of the 1D1F initiative argue that such incentives are crucial for industrialization and economic development. They believe these waivers can attract investment, stimulate local production, and create jobs.
However, the MPs leading the lawsuit contend that the waivers are not beneficial to Ghana. They argue that these exemptions could lead to significant revenue losses, which might outweigh the potential economic benefits.
By taking this issue to the Supreme Court, the plaintiffs seek to ensure that tax policies align with constitutional provisions and serve the national interest.
Conclusion
The outcome of this legal challenge could have far-reaching implications for Ghana’s tax policy and economic strategy. If the Supreme Court rules in favor of the plaintiffs, it may lead to a reassessment of the criteria and processes for granting tax waivers.
On the other hand, if the court upholds the GRA and Finance Ministry’s decision, it could reinforce the government’s approach to incentivizing industrial growth through tax exemptions.
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