What are the general rules governing investment in Ghana?

What are the general rules governing investment in Ghana?

Ghana has been making intensive efforts to attract foreign private investment since the introduction of its Structural Adjustment Programme in 1984. The objective of creating an enabling environment for investment has necessitated the promulgation of new laws on investment. The main such legislation is the Ghana Investment Promotion Centre Act, 1994 (Act 478) (“GIPC Act”), replacing the Investment Code, 1985 (PNDCL 116) and the Free Zone Act, 1995 (Act 504).


 This Act establishes the Ghana Investment Promotion Centre (“GIPC”) as the agency responsible for coordinating and monitoring all investment activities except investments in the mining and petroleum sectors. The GIPC Act requires enterprises with foreign participation to register with the Centre “after incorporation or registration” under the applicable law.

In practice however, the procedures for incorporation and the procedure for registration at the Centre will take place simultaneously. Clinton Consultancy aid clients to submit the GIPC application supported by a certificate of incorporation and evidence of a bank transfer or investment in capital goods to satisfy the foreign equity requirements. Where the Centre is satisfied that all documents for registration are in order and the minimum foreign equity capital requirement has been met, it must register the enterprise within five working days from the date of receipt of the registration form.

Licensing under the Free Zone Act

Applications for a license to carry on a trade, business or industry within a free zone are made to the Executive Secretary of the Free Zones Board. The applicant is required to submit an application form specifying such particulars as the name and address of the enterprise and the location of the project, particulars of its directors and shareholders, the type of trade, business or industry to be carried on, details of the machinery and raw materials required for the project and their estimated cost, estimates of annual production and export to foreign markets for the first three years, the total number of national and expatriate employees to be employed in the first three years and details relating to the funding of the project. The Board is required to respond to applications within 28 working days. In granting a license, the Board may attach such conditions as it considers appropriate relating to skills, job opportunities and degree of export orientation. The conditions that the Board may attach to a grant of license depend on the particular project to be undertaken. However the Board generally requires that enterprises comply with environmental standards set by the Environmental Protection Agency, health and safety standards under the Factories, Shops and Offices Act, 1970 (Act 328) and any other laws relevant to the proposed undertaking. The Board may revoke the license where a condition attached to the license has been breached. The Board must give the licensee at least 14 working days notice; must state the reasons for the revocation; and must give the licensee an opportunity to make representations to the Board with the aim of preventing the revocation of the license.

Does Ghana grant any investment incentives?

 Incentives under the GIPC Act

This Act grants the following investment incentives: Free Transferability of Dividends and Profits. An enterprise registered with the GIPC is guaranteed unconditional transferability through any authorised dealer bank in freely convertible currency of dividends or net profits attributable to the investment, payments in respect of loan servicing where a foreign loan has been obtained, fees and charges in respect of any technology transfer agreement registered under the Act, and the remittance of proceeds (net of all taxes and other obligations) in the event of sale or liquidation of the enterprise or any interest attributable to the investment.

Personal Remittances

Expatriate personnel employed or engaged in a registered enterprise are permitted to make remittances not exceeding the total official wage of the expatriate abroad through authorised dealer banks.

Immigration Quota

 Registered enterprises are entitled, upon application to the Ghana Immigration Service, to an initial automatic maximum immigration quota commensurate with the paid up capital.

For enterprises with a paid up capital of between US$10,000.00 and US$100,000,00, the said quota is one (1) person. For enterprises with a paid up capital of between US$100,000.00 and US$500,000.00 have a quota of two (2) persons. Enterprises with a paid up capital of more than US$500,000.00 are entitled to a quota of up to four (4) persons.

Duties and other Taxes

Registered enterprises are also entitled to such benefits and incentives as may be applicable to such enterprise under the Internal Revenue Act and under Chapters 82, 84, 85 and 98 of the Customs Harmonised Commodity and Tariff Code (“Harmonised Code”) scheduled to the Customs, Excise and Preventive Law, 1993 (PNDCL 330) and any other law in force. The chapters of the Customs Harmonised Commodity and Tariff Code referred to above specify items that have been zero-rated under the Customs and Excise (Duties and other Taxes) Act, 1996 (Act 512). Where the plant, machinery, equipment or parts of any enterprise are not zero-rated under the Harmonised Code, the enterprise may submit an application for exemption of import duties, sales tax or excise duties on the plant, machinery, equipment or parts to the Centre. Such applications are usually granted.

Special Incentives

 The GIPC Board may negotiate special incentive packages with the approval of the President in order to promote identified strategic or major investments. Tax exemptions have been granted where the beneficiaries are engaged in projects of strategic importance to the Ghanaian economy, or where the project is one that serves as a primary project from which other secondary projects would evolve. It should be noted however that the grant of tax exemptions or waivers is subject to parliamentary approval in accordance with Article 174(2) of the Constitution which provides that where an Act confers power on any person or authority to waive or vary a tax imposed by that Act, the exercise of the power of waiver or variation is subject to the prior approval of Parliament by resolution.

 Incentives under the Free Zone Act

This Act grants the following investment incentives: Non-application of law relating to imports and exports. The laws of the country for the time being in force relating to the importation and exportation of goods and services other than consumer goods, for commercial purposes, do not apply to the bringing of goods directly from a country outside Ghana into a free zone or the dispatch of goods for export out of a free zone to a country outside Ghana. Import duty exemption Imports of a free zone developer, subcontractor or enterprise into a free zone are exempt from direct and indirect taxes and duties. Income Tax Free zone developers and enterprises enjoy a ten-year tax holiday from the date of commencement of operations. Such enterprises also enjoy a concessionary post holiday tax rate of 8%. Foreign employees are totally exempt from payment of income tax in Ghana on income earned in the free zone, subject to the existence of a double taxation agreement between Ghana and the government of that foreign employee, under which the employee is liable for income tax in his home country. Shareholders of free zone enterprises are exempt from the payment of withholding tax on dividends arising out of free zone investment. Ownership Both foreign and local investors may hold 100% shares in a free zone enterprise.

Free transferability

Free zone enterprises are guaranteed unconditional transfer through authorised dealer banks in freely convertible currency of dividends or net profits attributable to the investment, payments in respect of loan servicing where a foreign loan has been obtained, fees and charges in respect of any technology transfer agreement registered under the Act and the remittance of proceeds (net of all taxes and other obligations) in the event of sale or liquidation of the enterprise or any interest attributable to the investment.

Relevant Investment Protection, Expropriation and Dispute Settlement rules

 The GIPC Act and the Free Zone Act contain identical provisions dealing with the protection of investments, expropriation and dispute settlement. Both Acts provide that no enterprise shall be nationalised or expropriated by Government and that no person who owns, whether wholly or in part, the capital of an enterprise, shall be compelled by law to cede his interest in the capital to any other person. With regard to the acquisition of an enterprise by the State, the Acts provide that the State may only acquire such enterprises where the acquisition is in the national interest or for a public purpose and under a law which makes provision for payment of fair and adequate compensation and a right of access to the High Court for the determination of the investor’s interest or right and the amount of compensation to which he is entitled. It is also unlawful to compel any person to cede his interest in an enterprise to any other person.

Any compensation payable must be paid without undue delay and authorisation for its repatriation in convertible currency, where applicable, must be issued. With regard to dispute settlement, both Acts provide that where in a dispute between an investor or licensee and the government, all efforts to reach an amicable settlement fails, the aggrieved party has the option to submit the dispute to arbitration under the procedures of the United Nations Commission on International Trade Law (UNCITRAL) or within the framework of any bilateral or multilateral investment protection agreement to which Ghana and the investor’s or where the free zone license is a foreigner, the licensee’s country are parties, or in accordance with any other national or international dispute settlement procedure. Ghana has concluded bilateral investment treaties with a number of countries including the United States, United Kingdom, the Netherlands, France and Germany.

Ghana has also ratified the Convention on Settlement of Investment Disputes between States and Nationals of Other States (ICSID). Further, as a member of the World Trade Organisation (WTO), Ghana has signed WTO investment rules, which are the Agreement on Trade-Related Investment Measures (TRIMS), Agreement on TradeRelated Intellectual Property Rights (TRIPS) and the General Agreement on Trade in Services (GATS). Where there is a disagreement between the investor or licensee and the government as to the method of dispute settlement to be adopted, the choice of the investor or licensee shall prevail.

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