Saturday, 17 March 2018

GREDA wants full content of new tax holidays disclosed

Image result for real estate

Adnan Adams Mohammed

The Ghana Real Estate Developers Association (GREDA) wants government to disclose fully the content of the proposed new tax holidays for players in the real estate industry.

Although GREDA describes the news as welcoming, it says its members need further clarification on how the tax holiday will be of benefit to the industry.

“It is welcoming except that we want to understand what the new terms are; definitely there has to be something new and beneficial as an incentive for the real estate developers. So we want to know the full content of what this policy is going to do,” Executive Secretary of GREDA Sammy Amegayibor said.

The government, last week, revealed plans to grant tax holidays and other incentives to new estate developers in the country.

The incentives form part of a grand scheme by the government to help attract more investments into the real estate sector.

The Deputy Minister of Works and Housing, Mr Eugene Boakye Antwi, who revealed the plans explained that, under the incentive package for first-time estate developers, qualified companies would be guaranteed unconditional transfer of their dividends or net profits attributed to the investments.

The transfers would be done through their authorised dealer banks in freely convertible currencies, he added.

He said the first time developers would also be granted tax holidays for five years, beginning from the end of the project.

“Under the incentives, qualified developers will also be granted exemption from the payment of custom import duty and value added tax (VAT) on materials and supplies, both imported and locally sourced.

“There will also be exemption from the payment of custom import duty on plant, vehicle, equipment and machinery,” the deputy minister added.

He said the government had also decided to exempt the first time developers from the payment of rent and property rates on “temporary structures and buildings erected on site by the real estate developer for sole purposes of housing.”

At a meeting for chief executive officers of member companies of the Ghana Real Estate Developers Association (GREDA) in Accra on strategies in place to address the challenge, Mr Boakye Antwi said the ministry was convinced that the incentives and a proper support framework would help to solve the housing deficit while creating more jobs for the teeming youth.

The President of GREDA, Mr Kwakye Dopoah-Dei, said the association valued quality because home buying was a lifetime investment.

He, however, noted the increasing concerns by the public about the quality of houses on offer by some estate developers.

“This is unacceptable and must be checked to maintain public confidence in developers,” he said.

He indicated that the association was introducing internal quality control mechanisms to complement the work of the Land Use and Spatial Planning Authority to help maintain quality and standards in the real estate business.

The Real Estate Developers have since early last year been admonishing President Nana Akufo Addo to “Walk the Talk” by fulfilling his promise of abolishing the 5% VAT on Real Estate sales during the campaign era in 2016.

The VAT, which was initially 17.5% was reduced to 5% by the previous NDC government but the real estate developers wanted it scrapped.

The Executive Secretary of the Ghana Real Estate Developers Association (GREDA), Samuel Amegayibor, right after the elections which saw Nana Akuffo Addo declared as winner started put pressure on the new government to redeem its promises.

Mr Amegayibor lamented over the effect of the VAT on businesses.  According to him, business has slowed down as demand for estates reduces due to high cost.

“It has really brought our sales down and increased the cost of houses and the general public is complaining,” he said, adding that the current government’s refusal to scrap the 5% VAT has affected business activities.

“For us as business people, this tax was of great concern to us and so we raised it to the outgoing president. We dialogued for close to two years before we were able to get a cut. Our original expectation was for it to be completely scrapped but much as we tried government insisted that this tax must pass so they went ahead and implemented it,” he recalled.

But, in an interview last week, Mr. Sammy Amegayibor said the new proposed tax holidays when they materialize, will solve some major challenges facing the industry.

“It is one part of the solutions to the challenges that players in the industry are having. In housing, it takes a very long time to start a project and so five years for real estate developers as an incentive to enjoy some tax relief, is really good for the industry for one reason. That the five years will give sufficient time for the companies to properly pop up and be ready to take the mantle on,” he added.

Ghana’s housing industry has been faced with huge challenges. Currently, the country faces a huge housing deficit estimated at 1.7 million units.

Successive governments have since tried to sanitise the industry to make it more lucrative for investors.

Government has proposed a land bank policy to address the rising housing deficit by the end of the year.

The program has become necessary as the issue of land acquisition has been cited as one of the basic issues contributing to Ghana’s housing crisis.

Under the policy, custodians of lands such as traditional leaders will offer available concessions to estate developers to be developed and repaid under agreed and flexible terms.

GREDA has since called on government to ensure the project is achieved by the end of the year.