Dr. Nii Kotei Dzani, Group Chief Executive Officer of Ideal Financial Holdings, has called for the introduction of policies and regulations to curtail the repatriation of profits by multinational firms operating in the country.
“I believe it is high time we take a look at the laws governing repatriation of profits by the multinationals. They cannot be allowed to repatriate everything without being regulated to invest a percentage in the country,” he said in an interview on the sidelines of a symposium to mark the fifth anniversary of Ideal Finance, a subsidiary of Ideal Financial Holdings.
The Ghana Investment Promotion Centre Act, 2013 (Act 865) guarantees unconditional transferability in freely convertible currency of dividends or net profits attributable to investment made in the enterprise and the payments in respect of loan servicing where a foreign loan has been obtained.
The centre also guarantees the transfer of fees and charges in respect of a 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 in the enterprise.
Dr. Dzani is of the view that since these firms tend to enjoy a lot of tax exemptions they shouldn’t be allowed to repatriate everything but be made, by law, to reinvest in the economy: which will create more jobs and bring about growth and development.
Foreign companies who operate in some regions of the country enjoy a tax-free status while others enjoy holidays for up to 10 years. The Free Zones Act 504 provides tax-holidays of 10 years for companies operating in areas demarcated as Free Zones. Thereafter, corporate tax is paid at the rate not above 8 percent.
He noted that these tax-breaks go to help those foreign firms and serve as disadvantages to the local companies that are interested in growth and sustainability of the economy.
According to him, the currency’s instability can also be blamed partly on arbitrary profit repatriation since billions of dollars are repatriated on an annual basis; but should a percentage of that money be reinvested here the cedi could see some stability.
“The profits made in this country are always repatriated in dollars. We do not have regulations or policies to ensure that foreign companies invest their profits in the economy. Instead, they are allowed to repatriate everything….and this continues to put pressure on the cedi.”
While calling on the government to as a matter of urgency introduce a regulation and also remove tax exemptions, he also urged the private sector to improve and increase the nation’s exports as that will aid in changing the economy’s fundamentals.
“Foreign firms are given unbelievable tax exemptions to come in, but then are allowed to take away all the profit; we are losing at both ends and this cannot continue. We are not saying foreigners should not repatriate their profit, but should they be allowed to take everything away? No. Some must be reinvested here by regulation.”
He believes that once tax exemptions are removed entirely, indigenous businesses can easily compete with the multinationals. “Foreign firms are given tax exemptions while locals are not. Is that a level playing field? We want a level playing ground.”
The symposium saw Prince Kofi Amoabeng, CEO of UT Bank, urge banks to step out of their comfortable offices to learn more about SMEs and how to provide them with adequate credit. Former President John Agyekum Kufour called on government to create the enabling environment for private businesses to thrive.
