Growth and Sustainability Levy will trigger disinvestment in oil industry — Upstream Petroleum Chamber
The Ghana Upstream Petroleum Chamber is calling on the government to reconsider the Growth and Sustainability Bill which seeks to impose a one per cent tax on gross production for oil and gas companies.
The Chamber is of the view that the introduction of this levy could not have come at a worse time when the country is struggling to attract new investments in oil and gas exploration.
It therefore believes the bill, if not reconsidered, would lead to the collapse of indigenous oil service companies as well as trigger disinvestment by International Oil Companies.
The Growth and Sustainability Bill which was presented and read for the first time in Parliament in December 2021 forms part of measures by the government to rake in more revenue and also expected to replace the Fiscal Stabilisation Levy.
The Bill, when passed, is expected to help rake in GH¢2.2 billion for the country in 2023.
But ahead of its debate and possible passage, the Chamber has issued a release to point out that the provision for a one per cent tax on gross production for oil and gas companies, represents an increase in royalty to all intents and purposes.
“There is also a five per cent tax on profit before tax that applies to the oil and gas service companies meaning taxes will be imposed irrespective of the financial performance of the target business.
“Introducing additional taxes at a time when the industry is going through challenging times is rather unfortunate, anti-business and risks the collapse of indigenous oil service companies as well as trigger disinvestment by International Oil Companies,” the release noted.
The release further indicated that the industry considered this levy as the latest in a series of creeping taxation that is affecting the economic balance of petroleum agreements.
It said other examples of creeping taxation included the COVID-19 Recovery Levy, Ghana Education Trust Fund Levy, National Insurance Levy, the one per cent Local Content Fund Levy and several others.