To facilitate the timely completion ofthe project, the Government of theRepublic of Ghana through the KumasiMetropolitan Assembly entered into aCommercial Contract with ContractaEngenharia Ltda. in respect of the KumasiMarket Redevelopment Project. The two Agreements were presentedto Parliament and at its twenty-fourthSitting of the Second Meeting held onFriday, 18th July, 2014, Parliamentapproved by Resolution, the credit facilityand the commercial contract to pave wayfor the commencement of the project.
Required waiver To ensure the timely completion of theproject and that the KMA does not incuradditional cost on the project as a resultof payment of taxes by the Contractor, andin line with the Contract Agreement, theMinistry of Local Government and RuralDevelopment through the Ministry ofFinance is seeking a waiver of import andother project related taxes including importVAT, EDAIF, NHIL, ECOWAS Levy,destination inspection fees, withholdingtax liabilities equipment and materialsprocured for the Kumasi MarketRedevelopment Project. The Ghana Revenue Authority hasassessed the applicable taxes, duties andlevies on equipment and materialsrequired for the execution of the project.A tax exemption of up to forty-four million,twenty-eight thousand, three hundredand three United States dollars andtwenty cents (US$44,028,303.20), istherefore being requested for thesuccessful execution of the project.
Observations The Committee having carefullyscrutinised the request, made thefollowing observations:
Assessment of tax liabilities and thewaiver required The Committee noted that, theCustoms Division of the GRA uponrequest from the Ministry, and based onthe invoices submitted, has assessed theapplicable taxes, duties and levies onequipment and materials required for thesuccessful execution of the project andhas accordingly recommended a total taxliability of the cedi equivalent of fifty-fivemillion, thirty-five thousand, threehundred and seventy-nine United Statesdollars (US$55,035,379) for whichexemption should be granted. The Committee, however, noted that,the total tax exemption being requestedfor by the Ministry amounts to the cediequivalent of forty-four million, twenty-eight thousand, three hundred and threeUnited States dollars and twenty cents(US$44,028,303.20). The Hon Deputy Minister explainedthat the Ministry of Finance as part of itsdue diligence and upon a thoroughassessment of the request, disallowedsome of the items for which the exemptionhas been requested. The Ministry therefore recommendedthe approval of a waiver of up to the cediequivalent of forty-four million, twenty-eightthousand, three hundred and three UnitedStates dollars and twenty cents(US$44,028,303.20), on core project materialsand equipment required for the execution ofthe project.
Justification for the Request Stressing on the need for the waiver,the Hon Deputy Minister indicated that,to facilitate speedy execution of the projectby Contracta Engenharia Ltda, essentialequipment and materials for which dutiesare applicable are being imported. TheHon Deputy Minister added that, theimported equipment and materials which
form part of the essential items requiredfor the successful implementation of theproject are being imported solely for theredevelopment of the Kumasi CentralMarket. In this regard, customs duties andother related taxes arising out of theimportation of these essential equipmentand materials are colossal and require theintervention of Government by way ofexemption of the applicable taxes. The Hon Deputy Minister explainedthat, this will limit the transfer of the taxes/charges at the port to the KumasiMetropolitan Assembly as indicated in thecontract Agreement approved byParliament. In the contract Agreement itis indicated that any such taxes shall beon account of KMA. According to the Deputy Minister, oneof the pragmatic ways of supportingKMA/MLGRD to complete the Project ata reasonable cost and time is to grant taxexemptions to clear these vital equipmentand essential materials. Additionally, itwould avoid a situation where the costincurred would be passed on to the tradersthus making the stores rather expensive. The Committee reiterates its call to theMinistry of Finance and the GhanaRevenue Authority, to intensify itssurveillance to ensure that, the appropriatetaxes are paid when the equipment are tobe disposed-off or used for other purposesfor which this waiver does not cover.
Conclusion and Recommendation The Committee after its deliberations, isof the view that the project is a self-financing one, capable of generatingrevenue to repay the credit facility. Again, the requirement to extend taxincentives to the contractor forms part of
the Commercial Agreement alreadyapproved by the House. The Committee therefore recommendsto the House to adopts its report andapprove by resolution, the Request for thewaiver of Import Duties, Import VAT andNHIL, ECOWAS levy, EDAIF, InspectionFees, Withholding Taxes, and other relatedtaxes amounting to the cedi equivalent offorty- four million, twenty-eight thousand,three hundred and three United Statesdollars and Twenty cents (US$44,028,-303.20) relating to project materials andequipment to be procured underCommercial Contract between thegovernment of the Republic of Ghana,Kumasi Metropolitan Assembly andContracta Engenharia Ltda. in respect ofthe Kumasi Central Market Redevelop-ment Project in accordance with article 174(2) of the 1992 Constitution and Order 169of the Standing Orders of the Parliamentof Ghana Respectfully submitted.
