Doing Business in Ghana Key Issues and Challenges

Doing Business in
Ghana
Key Issues and
Challenges
April 2014
Introduction
The key issues and challenges encountered in doing business in Ghana are considered in
three key areas:
•The requirements of the Ghana Investment Promotion Centre (GIPC);
•The requirements and issues facing companies regulated by the Petroleum Commission; and
•The requirements and issues facing companies regulated by the Minerals Commission.
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1
Ghana Investment Promotion Centre (GIPC)
•
The GIPC is responsible for the encouragement and promotion of foreign investments in
Ghana.
•
The key requirements / issues of the GIPC
•
High Minimum Foreign Capital Requirement
•
In the case of a joint enterprise with a partner who is a citizen, the foreigner must invest
not less than $200,000 in cash or capital goods relevant to the investment. The citizen
must not have less than 10% equity participation.
•
Where the enterprise is wholly owned by a foreigner, the investment should not be less
than $500,000 in cash or capital goods.
•
A foreigner intending to undertake trading business needs a minimum capital of US$1m,
and at least twenty skilled Ghanaians.
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with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
2
Ghana Investment Promotion Centre (GIPC) (cont’d)
•
Automatic Expatriate Quotas
•
Automatic expatriate quotas are granted depending on the capital contributed:
Minimum Amount
Maximum Amount
Quota Received
$50,000
$250,000
1 person
$250,000
$500,000
2 persons
$500,000
$700,000
3 persons
More than $700,000
•
4 persons
Quota in excess of four persons are granted at the discretion of the GIPC.
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with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
3
Ghana Investment Promotion Centre (GIPC) (cont’d)
Challenges
•
High capital requirements – some investors are not able to meet this requirement and
therefore resort to working with local partners where the capital required is lower.
•
Finding and working with a Joint Venture partner where applicable may not be that easy,
particularly if the intended business model of the foreign investor does not require this.
•
It is difficult employing twenty skilled Ghanaians at inception as this has serious
implications for profitability where the volume of activity may not actually require this.
•
Some companies have a real need for more expatriates as the skills they need are not
readily available in Ghana, but they are not able to obtain this as expatriate quotas in
excess of the automatic four allowed by the law are granted at the pure discretion of the
GIPC.
© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
4
Petroleum Commission (PC)
•
The Commission is to regulate, monitor and manage petroleum activities and the utilization of
petroleum resources and to co-ordinate the policies in relation to them.
•
Key Requirements / Issues
•
A non-indigenous Ghanaian company which intends to provide goods or services to a
contractor, a subcontractor, licensee, the Corporation or other allied entity within the
country shall incorporate a joint venture company with an indigenous Ghanaian company
•
The indigenous Ghanaian company should be afforded an equity participation of at least
ten percent.
•
A contractor, sub-contractor, licensee or other allied entity shall establish and implement a
bidding process for the acquisition of goods and services to give preference to indigineous
Ghanaian companies.
•
At the inception of the petroleum license, there is a minimum local content of ten (10) per
cent for goods and services, thirty (30) per cent for management staff, twenty (20) per cent
for technical core staff and eighty (80) per cent for other staff.
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with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
5
Petroleum Commission (cont’d)
“indigenous Ghanaian company" means a company that has
•
been incorporated under the Companies Act, 1963 (Act 179);
•
at least fifty-one percent of its equity owned by a citizen of Ghana;
•
Ghanaian citizens holding at least eighty percent of executive and senior management
positions; and
•
one hundred percent of non- managerial and other positions.
Challenges
•
Mineral and petroleum exploration and production rights are now subject to capital gains
tax under a new law passed by Parliament.
•
Finding a Joint Venture Partner
•
Heavy license and renewal fees.
© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
6
Minerals Commission
Key Requirements / Issues / Challenges
•
Pressure on the Government to revisit the mining agreements of some companies;
•
Windfall profits tax;
•
Ring fencing provisions in the tax law - a person engaged in mining operations shall not be
allowed a deduction for expenses exclusively incurred in a mining area against revenue derived
from another mining area belonging to that person or in which that person has an interest, in
determining that person’s chargeable income for a basis period;
•
Restriction on expatriate recruitment and promotion of local workforce;
•
For mining lease license holders, it is expected that the percentage of expatriate workers to the
total workforce would not exceed 10% for the first 3 years and 6% after the 3rd year;
•
Mineral right holders and providers of mining support services are required to maintain
procurement plans in which local products are to be procured and utilized to the extent possible;
•
The procurement plan should cover an initial period of 5 years;
•
A licence holder shall provide to the Mineral Commission particulars of the quantity and grade of
the minerals to be shipped and access to the samples taken to the Government approved
laboratory for assaying.
© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
7
Thank you