Extend zero VAT policy to consolidate gains – Textile manufacturers appeal
Ghana's local textile industry is seeking to remain vibrant
• Textile manufacturers want an extension of a zero VAT policy
Read full article• The current regime will expire in December 2021
• The AfCFTA is expected to boost trade and investments
Some four local textile manufacturers have made a passionate appeal to the government to extend the zero Value-Added Tax policy on the supply of domestically manufactured textiles for 10 years.
According to a Daily Graphic report, the four companies are Tex Style Ghana Limited (TSG), Printex Limited; Akosombo Industrial Company Limited (AICL) and Volta Star Textile Limited.
They point that an extension of the current regime which is for a period of three years, when reviewed to 10 years would help create more employment in the garment sector.
“The extension of the zero VAT policy would also create more jobs in the garment sector by growing the number of garments we make from 160,000 pieces currently to over 2 million pieces by 2025; this will help us take advantage of the African Continental Free Trade Area (AfCFTA) and African Growth and Opportunity Act (AGOA),” the companies said in a proposal sent to the Ministry of Finance through the Association of Ghana Industries (AGI).
They add that the current zero VAT regime in place for local textile manufacturers has seen an uptick in their businesses for which reason an extension of the intervention was required to consolidate the gains.
The proposal by the companies further said despite the adverse impact of the coronavirus pandemic on their businesses, they had managed to plough back the windfall into retooling their companies hence the need for a 10-year extension of the policy to assist them to amortise.
“The extension would help to grow the local textile printers market share from the current 20 percent to 50 percent and direct employment from 2,500 to over 5,500 by 2030 Additionally, it would facilitate the creation of over 100,000 employment opportunities for cotton farmers, logistics companies and other service providers within the value chain,” they added.
In 2019, Parliament passed a bill to extend the period for the zero-rate VAT policy which was for three years.
The move was hinged towards reviving the local textile industry which was facing imminent collapse due to an influx of pirated and cheap products on the domestic market.
Meanwhile, the current zero VAT policy in place is expected to expire by the end of 2021.
