Mr. Speaker, I beg to move, that this honourable House adopts the Report of the Finance Committee on
the Request for waiver of tax liability on equipment/materials to be imported or purchased locally, corporate tax and other taxes totalling gH¢5,149,208.48 in respect of the implementation of the first phase of the National Communication Backbone Network Project.
Mr. Speaker, may I present to you your Committee's Report.
1.0 Introduction
The above request for tax waiver was laid in the House on 15th October 2008 and referred to the Finance Committee for consideration and report in line with article 174 of the 1992 Constitution and the Standing Orders of the House.
To consider the request, the Committee met with the Minister of State at the Ministry of Finance and Economic Planning, hon. Dr. Anthony Akoto Osei, Deputy Minister for Finance and Economic Planning, hon. Prof. george gyan-Baffour and officials from the Ministry of Finance and Economic Planning and reports as follows;
2.0 Background
Hon. Members would recall that on Friday, 28th July 2006, Parliament appro- ved by resolution, a Loan Agreement for an amount of US$ 30 million for the implementation of the first phase of the National Communication Backbone Network Project.
Under article 10.1 of the Contract Agreement, the project is exclusive of the payment of local tariffs, VAT, taxes
(including corporate income tax and stamp tax), duties, withholding tax, levies, charges or fees that may be applicable in the country.
During the consideration of the Agreement, the Minister for Finance and Economic Planning assured the Committee that a formal request for the waiver would be brought to the House.
This request is what is now before the House.
3.0 Purpose of the Request
The purpose of this request is to seek the waiver from the payment of import duty, corporate tax and other taxes totalling gH¢5,149,208.48 for the National Communication Backbone Network Project (Phase 1).
4.0 Tax Waiver
The total taxes to be waived as assessed by the Customs, Excise and Preventive Service (CEPS), VAT Service and the Internal Revenue Service amounts to gH¢
5,149,208.48.
The breakdown is as follows:-
Item Amount (¢)
1. VAT -- 678,762.48
2. Corporate tax - -
1,007,768.00
3. Import Duty -- 3,462,687.00
Total -- 5,149,208.48
Attached as Appendix D is a list of the equipment and materials imported for the implementation of the works.
5.0 Observations
The Committee was informed that article 10.1 of the Agreement states that:
“The contract price is exclusive of local tariff, VAT, taxes, duties, withholdings, levies, charges or fees that may be applicable in the country by all authorities for the performance of the contract. In case there is a local requirement on the contractor for such payment, or any retention and/or withholding being made on the payment to the contractor, the prices quoted shall be adjusted accordingly”.
The Committee observed that article 10.1 of the Agreement indicates that if these exemptions are not granted and the contractor is made to pay the taxes, he would have to adjust the prices quoted accordingly. In order to prevent the contractor from adjusting the prices, there was the need to waive the project of the tax.
The Minister of State at the Ministry of Finance and Economic Planning, hon. Dr. A. A. Osei informed the Committee that due to the exigency of phase 1 of the project, temporary tax waivers were
granted by the Ministry of Finance and Economic Planning for clearance of the equipment and materials for the project pending the actual approval from Parliament. This was to ensure that the project did not come to a halt.
The Committee was informed that the phase 1 of the project has been duly completed and the network has undergone testing.
The Minister of State informed the Committee that in order to comply with the Agreement, there is the need for Parliament to grant approval for the waiver of taxes and duties as applicable to the project.
6.0 Conclusion
The Committee is of the view that this request is in compliance with the Agree- ment and therefore, recommends to the House to adopt this report and approve the request for waiver of tax liability on equipment/materials to be imported or purchased locally, corporate tax and other taxes totalling gH¢5,149,208.48 in respect of the implementation of the first phase of the National Communication Backbone Network Project in accordance with article 174 (2) of the Constitution.
Respectfully submitted.
“HEAD OFFICE
Near IRS Head Office Ministries Area
P. O. Box gP17177, Accra
Tel : 661525/661526/674 Fax : 674186
The Hon. Minister Ministry of Communications Box M. 38 Accra.
Dear Sir,
SUBMISSION OF VAT/NHIL ASSESSMENT