Introduction

Ghana’s Income Tax Act, 2015 (Act 896) as amended uses a mix of reduced rates, temporary concessions, accelerated deductions, loss relief, and international tax credits to direct investments toward activities with strong public benefits. The law concentrates most incentives in the First and Sixth Schedules, with supporting rules in core sections on deductions, capital allowances, and loss carry-forward.

When used with discipline and paired with infrastructure and skills, these incentives can reduce the cost of capital, promote exports, catalyse regional industrialisation, and create jobs, but risk revenue leakages without change in behaviour when poorly managed. This article seeks to map the main incentives with statutory references, then sets out findings, conclusions, and recommendations for policymakers and investors.

• The legal architecture of incentives in Act 896

Act 896 organises its incentive regime in four places, namely:

896. Charging provisions and exemptions: The Act defines the tax base and then exempts certain items from the base as provided in section 7 of Act 896.
897. Differential corporate rates: The First Schedule sets the standard company rate and then prescribes concessionary rates for specific sectors and locations, including Hotels, Non-traditional exports, Manufacturing outside major cities, and Free Zone enterprises after their tax holiday.
898. Temporary concessions: The Sixth Schedule grants time-bound concessions for defined activities such as; Agro-processing, Rural banking, Waste processing, Certified low-cost housing, Approved mutual funds and unit trusts, Venture capital financing companies, and Free Zone enterprises during their initial holiday.
899. Deductions, capital recovery and loss relief: Sections on repairs, research and development, capital allowances and loss carry-forward reduce effective tax burdens in the early years of projects and help firms manage volatility.

• Inventory of major incentives and where to find them in the law

2.1 Reduced corporate rates in the First Schedule

The First Schedule reduces the company rate for specific activities and locations that Government wants to encourage.

1. Standard company rate. The Corporate Income Tax rate of 25%, forms the baseline for comparisons.
2. Hotel Industry. A reduced corporate rate of 22% applies to income from hotel industry operations.
3. Non-traditional exports (NTEs). Chargeable income from qualifying non-traditional exports is taxed at a reduced rate of 8%.
4. Manufacturing by location. Manufacturing companies located outside Accra, and Tema benefit from a reduction of 25% to 50% of the statutory rate.
5. Financial intermediation to priority sectors. The Schedule recognises income from lending to farming enterprises and leasing for productive assets by financial institutions to be taxed at 20%.
6. Free Zones after the holiday. After the initial tax-holiday period, export income of Free Zone enterprises is taxed at a capped rate of 15% on export income outside the National Customs Territory and 25% on domestic sales.

2.2 Temporary concessions in the Sixth Schedule

The Sixth Schedule is the locus of time-bound incentives. Parliament has amended it to fine-tune which activities qualify and for how long as outlined below:

1. Agricultural business. The engagement in agricultural activities like tree crop, cash crop, livestock and aquaculture entitle a farmer to tax holidays ranging from 5 to 10 years.
2. Agro-processing. Income from agro-processing qualifies for a concessionary rate for a 5-year period from the start of commercial production.
3. Cocoa by-product processing. Similar treatment encourages investments that use cocoa shells, husks and other by-products to produce fertilisers, animal feed, and energy products.
4. Rural banking. Rural and community banks benefit from a 10-year concession aimed at expanding financial inclusion and mobilising rural savings.
5. Waste processing and recycling. A 7-year concession supports firms that convert waste to inputs or energy and divert refuse from landfill.
6. Low-cost housing. Certified companies that produce low-cost housing qualify for a 5-year concession, and the Act also supports home ownership through specific reliefs outside the company rate system.
7. Young entrepreneurs. The income of a young entrepreneur from the business of manufacturing, information and communications technology, agro-processing, energy production, waste processing, tourism and creative arts, horticulture, and medicinal plants shall be exempt from tax for a period of 5 years.
8. Approved unit trusts and mutual funds. A concession for approved collective investment schemes reduces the tax drag on pooled domestic savings and supports capital-market development.
9. Venture capital financing companies. A 10-year concession and tailored loss rules recognise the high volatility and patient-capital nature of venture finance.
10. Employment of fresh graduate. Businesses which employ fresh graduates are entitled to additional deduction for salary and wages paid during the year to a fresh graduate from a recognised Ghanaian tertiary institution.
11. Free Zone enterprises and developers during the holiday. Free Zone companies typically enjoy an initial tax holiday under the Sixth Schedule, after which the First Schedule post-holiday rate applies. Government communicates the parameters and the transition to the 15% export rate and 25% domestic rate.
12. Importers and manufacturers of excisable products. An importer or manufacturer of excisable goods shall be granted accelerated depreciation over a period of 2 years on affixing machinery and equipment imported for the implementation of the Excise Tax Stamp Policy.
13. Private universities. Privately owned universities shall be exempt from tax when they plough back 100% of their profit after tax into the business.
14. Registered manufacturers and assemblers of automobiles under the Ghana Automotive Manufacturing Development Programme are entitled to concessions ranging from 3 to 10 years.

2.3 Deductions, capital allowances and loss relief that operate like incentives

1. Repairs and improvements; Research and Developments (R&D). The Act allows deductions for repairs and for research and development undertaken to derive income from business, subject to ordinary tests. These provisions lower the cost of innovation and asset upkeep.
2. Capital allowances. Section 14 and the Third Schedule grant capital allowances by class or pool for depreciable assets. Accelerated cost recovery reduces taxable income in early years and can materially improve project cash flows.
3. Loss carry-forward. Section 17 permits businesses to carry forward unrelieved losses.

2.4 International and structural relief

1. Foreign tax credit. Residents may credit foreign income taxes against Ghanaian liability on foreign-source income, within statutory limits. This reduces juridical double taxation and supports the outward expansion of Ghanaian firms.
2. Reorganisations and rollovers. Act 896 contains reliefs that allow tax-neutral mergers, amalgamations and certain asset replacements where continuity thresholds are met. These rules reduce the tax friction of restructuring and modernisation.

• Findings

1. The framework is rules-based and largely automatic. Most incentives are hard-wired into Schedules with stated rates, sectors and time limits. This reduces discretion and improves predictability for investors who meet the criteria.
2. Temporary concessions dominate, which is good practice. The Sixth Schedule is time-bound. Parliament has adjusted it through amendment Acts rather than ad hoc exemptions, which allows periodic review and sunset.
3. The incentive map aligns with public priorities. Agro-processing, non-traditional exports, regional manufacturing, rural finance, waste processing, low-cost housing, venture capital and mutual funds are activities with clear spill overs. The law channels relief toward them rather than offering blanket holidays.
4. Spatial incentives are material but not sufficient on their own. The differential company rate outside Accra, Tema and the regional capitals is significant. In practice, investors still face hurdles in land servicing, utilities and logistics that can outweigh a rate cut unless policy is coordinated.
5. Capital recovery rules are investment-friendly. The combination of R&D deductibility, repair deductions and capital allowances mean early cash flows improve, which is exactly when projects are tightest.
6. Loss rules are targeted but complex. Monitoring of carry-forward periods, matching rules and the interaction with minimum chargeable income can confuse taxpayers.
7. Free Zones are integrated into Act 896 with a clear post-holiday regime. The statute and guidance make the transition to the 15% export rate after the holiday clear, with domestic sales taxed at the standard rate.

• Conclusions

In conclusion, Act 896 has the core elements of a modern, growth-oriented incentive system. The First Schedule uses targeted rate cuts whilst the Sixth Schedule uses time-bound concessions. On paper, this is a coherent, pro-investment design that prioritises activities with spill overs. Where industrial land, reliable power, water, trade facilitation, standards infrastructure and skills are scarce, tax alone will not tip investment decisions. For spatial incentives to shift factories, industrial parks must be serviced and connected.

• Recommendations

5.1 For policymakers

1. Publish an annual tax-expenditure statement. List each item in the First and Sixth Schedules, beneficiaries, cost to revenue, and outputs such as jobs, export earnings, tonnage of waste processed, or number of low-cost housing units delivered. Tie continuation or sunset to performance.

1. Issue consolidated public guidance on the First and Sixth Schedules. Update and collate existing Ghana Revenue Authority (GRA) guidance on reduced rates, location-based manufacturing relief, non-traditional exports, Free Zone transitions, and priority-sector loss relief.

1. Make spatial incentives “plug-and-play”. Ring-fence the location-based rate with serviced sites. Create a standard package where a company that commits to an eligible zone receives the rate cut plus guaranteed access to utilities, expedited permitting, and standard land documentation within a fixed timeline.

1. Refresh venture and pooled-savings incentives for depth and discipline. Keep the Sixth Schedule treatment for venture capital financing companies and approved mutual funds, but require transparent reporting on investment allocations and development outcomes, so reliefs support scale in productive assets rather than short-term trading.

1. Codify a clear Free Zone transition playbook. Publish a checklist for the end of the holiday period, covering accounting for mixed supplies, allocation of common costs, and documentation for the 15% export rate and 25% domestic rate.

5.2 For investors and advisers

1. Start with a statutory checklist. Map your project against the First and Sixth Schedules and note the concession windows. For each claimed relief, gather contemporaneous documentation such as commencement dates, certification for low-cost housing, agro-processing definitions, and evidence of export status.
2. Optimise capital allowances. Classify assets correctly under the Third Schedule and maintain a fixed-asset register which tracks pools, additions, and disposal.

1. Model loss utilisation early. If you expect start-up losses, run scenarios that incorporate the five-year carry-forward of losses and the interaction with minimum chargeable income, then plan financing and dividend policies accordingly.

1. Locate with intent. If you can operate outside Accra, Tema and regional capitals, evaluate the location-based rate side by side with logistics and utility reliability.

1. Prepare for Free Zone sunsets. Ten years pass quickly. Build the post-holiday 15% export rate and 25% domestic rate into your pricing models.

1. Use foreign tax credits carefully. For regional expansions by Ghanaian firms, track foreign-source income baskets and documentation so that credits can be claimed efficiently without breaching statutory limits.

• My Opinion

It’s my opinion that, Ghana does not need a larger catalogue of tax incentives to boost investments. The tax incentives in Act 896 provides the backbone required to stimulate investments. The First Schedule points capital to priority activities and places whilst the Sixth Schedule gives young industries time to grow. Other sections on deductions, capital allowances and loss relief reduce early-year tax frictions when cash is tight.

To turn these legal tools into growth, Government should double down on transparency, sunset discipline and non-tax complements, while investors should plan eligibility and documentation with the same rigour they apply to financing and engineering. When done well, the existing regime can tilt private investment towards exports, green projects, regional balance and high-quality jobs, while preserving a stable tax base.

These and other interesting tax topics will be a subject of discussions by tax practitioners, tax administrators, taxpayers, policy makers, and other key stakeholders both at home and abroad during the coming Annual International Tax Conference of The Chartered Institute of Taxation Ghana, slated for 20^th-22^nd August 2025 at Alisa Hotel in Accra. All are invited to join the discussion on how best to generate more tax revenues without jeopardising investment promotion.

This article is my personal and professional opinion as a tax practitioner in the discharge of my duties as a GHANAIAN CITIZEN who seeks the success of Ghana, and it is not a representation of the opinion of any institution.

Ibrahim Asare (CA, MCITG, ADTP, BCom, and HND)               

ibasare@gmail.com; ibrahim@ibasare.com; @ib_asare; 0244 423 960

(The author is a Chartered Tax Practitioner- a Member of ICAG and a Member of the Chartered Institute of Taxation Ghana).