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$3.155m tax waivers for technical schools

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$3.155m tax waivers for technical schools

Members of Parliament (MPs) have voted in favour of tax waivers amounting to the Cedi equivalent of US$3,155,244.88 on local purchases and services in respect of the rehabilitation and upgrading of equipment in technical universities, polytechnics and technical as well as vocational training centres across the country.

The government made the request for the waiver of domestic VAT on Tuesday, May 26, 2020 as part of the Government Concessional Loan Agreement between it and the Export-Import Bank of China for fundamental reforms in the technical educational sector, which was launched and introduced last year.

Speaker of Parliament, Prof. Aaron Mike Oquaye, referred the request to the Finance Committee of Parliament for consideration and report.

On November 12, 2019, the Vice-President, Dr Mahamudu Bawumia, during a joint sod-cutting ceremony with the Vice-Premier of China, Sun Chunlan, in Tema, said government intended to mainstream technical and vocational education as the first choice for students.

He indicated that a total of 15 technical universities, polytechnics, technical and vocational training centres across the country were expected to be upgraded to world-class status as part of the plan.

Background

Parliament at its Thirty-Sixth Sitting of the First Meeting held on Friday, March 23, 2018 approved by resolution the concessional loan agreement between Government of Ghana and the EXIM Bank of the People’s Republic of China for an amount not exceeding RMB754,000,000 equivalent to US$119,101,946 to finance the rehabilitation and upgrading of equipment in technical universities, polytechnics and technical and vocational training centers.

Furthermore, Parliament at its Forty-Third Sitting of the Second Meeting held on Wednesday, July 25, 2018, approved by resolution the Supplementary Contract Agreement Nos. 1 & 2 as well as the Commercial Contract between the Government of Ghana acting through the Ministry of Education and Messrs. AVIC International Holding Corporation of China for the implementation of the above-mentioned project.

Subsequently, Parliament at its Forty-First Sitting of the First Meeting held on Friday, April 5, 2019, approved by Resolution the request for the waiver of Import Duties, VAT, GETFUND, Import NHIL, Special Import Levy, EXIM levy, AU and ECOWAS levies amounting to US$26,966,083 on project materials and equipment to be procured under the Polytechnic, Technical and Vocational Training Centres Upgrading project.

The resolution for tax exemption approved by Parliament covered only imports contrary to Clause 2 of the Supplementary No.1 of the Commercial Contract Agreement.

The present request thus seeks to include Domestic VAT on local purchases and services in the taxes to be waived in connection with the project.

Project Objective

The objective of the project is to improve the employability of Ghanaian youth by providing them with the relevant skills and competencies required for self and formal employment.

It is also to encourage indigenous entrepreneurship and provide Ghanaian industries with the relevant manpower to make them globally competitive.

Need for Waiver

The committee noted that Clause 2 of the Supplementary No.1 to the Commercial Contract Agreement required all duties and taxes to be waived, including domestic VAT.

It is thus necessary for the Domestic VAT component of the taxes to be waived in accordance with Article 174(2) of the 1992 Constitution of the Republic of Ghana.

Benefits of the Project

The Committee observed that the project when implemented, would produce highly skilled human capital.

source:Ghanaweb

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