Ghana may extend tax holidays up to 10 years to automakers which embark on local manufacturing. The move of one of the progressive nations in the region is to attract international companies, such as Volkswagen AG and Nissan Motor Co to set up their manufacturing units there.
Volkswagen and Nissan announced their plans to locate auto-assembly plants in Ghana availing official incentives schemes, which give tax breaks. Renault SA is considering a similar move. In March, Toyota Motor Corp. and Suzuki Motor Corp. were also toying with the idea of setting up manufacturing units in Ghana through joint venture routes.
A few countries in Africa are changing their tax structure to invite car manufactures. South Africa has emerged a hub for car manufacturing and attracted seven manufacturers including Renault, Nissan, and Toyota with tax incentives. Vehicle manufacturing accounts for about 7% of GDP of South Africa. The full 10-year tax break is extended to companies building whole vehicles in Ghana. A five year holiday will be available for partial manufacturing. Import duties on new and used vehicles will be increased to 35% from 5%-20% to encourage the purchase from locally built units while bringing in cars, which are older than 10 years, will be banned.
