Ghana’s textile industry to get boost due to 3 years VAT exemption from govt.
The local textile industry based in Ghana has got a boost following the government's decision to zero-rate Value-Added Tax (VAT) on the supply of locally manufactured textiles for a period of three years. This move is adopted to shorten their cost build up, make the local textile industry price-competitive and assist them in competing for the influx of cheap textile products from other parts of the planet.
Although the policy is expected to cost the government an estimated revenue of GH¢40.1 million annually, it comes as a huge relief to the industry who have for a long time now been appealing to the government for tax exemptions on their products, as reported by Graphic Online.
Ghana used to boast of a textile industry that employed around 30,000 people. Unfortunately, the industry has seen lots of downturns and currently it employs around 5000. The cause of the reduction of such employment is being given to the high-cost production in the sector. To make the industry competitive again, the government has introduced a Bill to Parliament to zero-rate VAT of local textiles.
The Finance Committee of Parliament said (in its report) it was expected that by the close of the three years, the local textile companies would have retooled and modernised their operations to compete. The committee also observed the passage of the bill would reduce the cost of production and make local textiles more affordable. The measure is likely to increase production and consumption of locally manufactured textiles and boost employment in the sector.