GHANA PETROLEUM TAX SYSTEM

Ghana Petroleum Tax System

Ghana Petroleum Tax System

Chapter 1: Introduction

In the year 2007, Ghana declared its first ever oil discovery in the region of Cape3 towards the points of country's coastal region where the area of water is present. Ever since the discoveries of oil in the region it was estimated that the reserves are over billion of barrels within the offshore water region, with a colossal chance of finding new wealth to propel the country greater level of economic and social development. It is the realized that the potential of the depended country fiscal year for the industry have continuous growth towards the oil industry. The use of the petroleum production within different countries maintains a premium quantity which from around the globe had a huge amount of proven reserves which typically had an overall contribution towards OPEC countries and Brazil. The adoption of the Royalty Tax System in the Ghana oil industry made a great impact and created a regime in the fiscal improvement of petroleum sector. (Minh, 2007, pp. 203-10)

Economic Condition of Ghana

In the early 1980s tax system in Ghana was deep in crisis. Introduction of the central government amounting to less than 5% of GDP, the government levies heavy agricultural sector, and producers of cocoa, has been based in particular on the price policy in order to obtain sufficient income to maintain the basic functions of the state. The intervening years witnessed a dramatic change, such as Ghana has one of the effective rates of tax collector for tax purposes as GDP in sub-Saharan Africa, only behind South Africa and Kenya are. In the years 2004-2007, the average sales reached over 20% of GDP and 3.2 million cedes. Sales growth was driven by big increases in foreign direct investment (income and corporation tax) and taxes on goods and services, including a major expansion after the introduction of VAT in 1998. Business tax, the third important component of the tax revenues have remained relatively stable since the end of 1980, although this masks a significant change, such as export taxes were eliminated almost completely, while to the customs revenue, mainly due to the expansion of trade and improved customs administration. (Minh, 2007, pp. 203-10) The two major components of income and corporation tax, other direct taxes, including capital gains and property taxes, very little income who because of the extremely poor implementation. Income tax for individuals is a progressive tax system with a maximum rate of 25%, while the corporation has, in recent years from 32.5% in 2001 fell to 25% in 2006. This reduction in corporation tax, combined with increased ease of compliance is a result of Ghana at the World Bank Doing Business survey reflects increased from the 77th Position of the 83rd Position in the league of 175 countries. Ghana was in this period among the top ten engines in the World Bank's Doing Business survey. In terms of revenues, corporate tax and income tax comprises almost identical shares of the ...