What is the Ghanaís Free Zone Programme
Ghanaís Free Zones Programme is designed to promote the processing and manufacturing of goods for exports through the establishment of Export Processing Zones (EPZs) and encouraging the development of commercial and service activities at sea and airport areas. Therefore, the whole of Ghana is accessible to potential investors who can use the free zones as focal points to produce goods and services for foreign markets.
Under the programme, a company established under the Free Zones is expected to export at least 70% of what its produces. The remaining 30% of production may be sold locally after the products have been marked-up by the applicable VAT and accounted to Government on monthly basis.
As a free zone enterprise in Ghana, your local input purchases are exempted from VAT and similarly your imported inputs such as, raw materials, machinery, equipment and motor vehicles are all exempted from Import Duty and VAT. The Ghana Free Zones Programme offers a lot of generous incentives which are covered below.
As a result of these generous investment incentives, several major brands and multinationals like Cargill, Alteco, LíOréal West Africa, Barry Callebaut among others have all established regional production and service hubs in Ghana to serve the over 350 million West Africa market. There are currently Export Processing Zones located in Tema, Sekondi, Shama and Ejisu.
Types of Licensing
The programme grants licensing for the under listed activities;
For investments to be eligible under the Free Zones programme the investment should satisfy the following conditions;
- Should be a limited liability company registered with the Registrar General Department.
- Should be export oriented.
- Should add some value to products/services to be exported.
- Should be environmentally friendly.
Application for a license to develop, manage, or establish an enterprise in the free zone; shall be written and submitted to the secretary of the board; specify the zone to be developed. Response to application will be made within 28 days from the date of the receipt of the application. After a successful registration, the board will grant a license to the applicant.
Registration requirements for free zone enterprises
Free Zones investors do not require any minimum capital investment. However, investors must indicate their ability to fulfill the minimum 70% export requirement. New investors are required to go through the following steps to obtain a free zone license;
- Incorporate a company in Ghana with the Registrar Generals Department and obtain certificates of incorporation and commencement of business.
- Obtain and complete the GFZA Application form and submit together with the following documents;
- Copy of Certificate of Incorporation
- Copy of Certificate of Commencement
- Copy of Companies Code
- Evidence of possession or lease of real property or intent to acquire such property.
- Memorandum of Understanding (MOU) with perspective clients.
- Environmental Protection Agency Permit( where necessary)
- Evidence of funding/ Capital transfer
- Any other relevant documents
The GFZA shall notify the applicant of the status of his/her application for license within 28 working days of receipt of a complete application.
A license specifying authorized activity to be undertaken (i.e. developer, manufacturer, commercial or service industry) by the applicant shall be issued to the successful applicant. The investor is required to start operations within 6 months of receiving approval to operate as a free zone enterprise.
Cost of Registration with the Ghana Free Zones Authority
An initial/ renewal license fee shall be paid as follows;
ACTIVITY INITIAL FEES ANNUAL RENEWAL FEES Developer $5,000 $4,000 Manufacturing $2,000 $1,600 Service $3,000 $2,000 Commercial $5,000 $4,000
TYPE ACTIVITY DEVELOPER 1). construct and maintain buildings, warehouse factory shells and provide or contract other persons to provide utilities or services such as water, electric power, telecommunications and sewerage.
2). provide fencing and enclosures to separate the zone from the national customs territory, and ensure security of the zone.
3). provide and contribute to the cost of facilities for such on site customs services as shall be determined by the Customs, Excise and Preventive Services (CEPS)
MANUFACTURING 1). Manufacture goods for export to other countries. SERVICE 1). Provide services, export services such as logistics for companies under free zones
COMMERCIAL 2). Provide commercial services such as packaging, re-bottling, labelling of finished products for exportation.
Advantages and Incentives for registering with free zones
When a company registers as a free zone enterprise, they enjoy the following benefits;
- Free zone developers and enterprises granted license shall be exempted from the payment of corporate tax on profits for the first ten years from the date of commencement of operation.
- The income tax rate after ten years shall not exceed a maximum of 15% per annum depending on the sector and location of business.
- A shareholder shall be exempted from the payment of withholding taxes on dividends arising out of free zone investments.
- Subject to the existence of a double taxation agreement between the Government of Ghana and the Government of the foreign employee, the foreign employee shall be totally exempt from payment of income tax to the Government of Ghana on income earned in the free zone during the period of work and resident permits issued shall remain valid except that the employee shall be liable of income tax in his home country.
- There are no conditions or restrictions on; repatriation of dividends or note profit, payments for foreign loan servicing, payments of fees and charges for technology transfer agreements, and remittance of proceeds from sale of any interest in a free zone investment.
- Free Zone investors are permitted to operate foreign currency accounts with banks in Ghana.
- At least 70% of annual production of goods and services of Free Zone Enterprises must be exported; consequently up to 30% of annual production of goods and services of a free zone enterprise are authorized for sale in the local market.
- Free Zone investments are guaranteed against nationalization and expropriation.
For an investor seeking to establish an export-oriented enterprise in Ghana, you should not ignore the option of setting up as a free zone enterprise. The return on investment for shareholders will be higher because of the government incentives and you will surely have a profitable enterprise for years.