AGI commends govt for zero VAT policy on textiles

Zero VAT is a beneficial policy for the textiles industry

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CEO of the Association of Ghana Industries, Seth Twum Akwaboah, has lauded the government for the implementation of zero VAT on the textiles industry.

According to him,

Read full articlethe smuggling of textiles into the country has created unhealthy competition for the local textile manufacturing industry.

Speaking at KPMG’s post 2022 budget review, Mr. Akwaboah stressed the inclusion of the zero tax in the 2022 budget saying it is a commendable move by the government.

“Another issue we pushed, was on manufacturing; the Zero VAT on textile manufacturers. The fact is that our textile companies were dying. A sector that was employing more than 30,000 people is now employing less than 3000. This is because most of the textiles that come into the country were smuggled and they were not paying the VAT on it, making it cheaper and making local industries less competitive, for that reason they were losing the market,” he said.

He explained that “we made an appeal to government and asked that we allow the local producers to be exempted from VAT to create an opportunity for a levelled playing field. This was done for 3years and monitoring the figures and development, we can say that we have had good consolidation today in the textiles sector.”

According to him, this has resulted in creating employment by an appreciable amount; adding that this has added significantly to the contribution of corporate tax.

"One of them made a profit and invested about 70per cent back into the business, one of them had their corporate tax quadrupled. So, where we lost it to VAT system, we gained it through corporate tax.”

The AGI wants the government to hasten steps to address the smuggling of textiles into the country.