Ghana grants 3-year tax holiday for local textile makers

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Textile producers in Ghana have received a boost following the government’s decision to zero-rate Value-Added Tax on the supply of locally manufactured textiles for a period of three years, in a bid to revive the once buoyant industry.

The move, championed by the Ministry of Trade and Industry, is to help reduce production cost, make the local textile industry price-competitive and help them compete with the influx of cheap textile products from other parts of the world.

Although the policy is expected to cost the government an estimated revenue of GH¢40.1 million annually, it comes as a huge relief to the industry which has for a long time been appealing for such interventions.

Ghana’s textile industry employed about 30,000 people in the 1980’s. However, over the past decade, the sector has struggled to cope with external competition.

In recent years, the textile industry has fallen on hard times and now employs just about 5000, a situation which has been largely blamed on the high cost production in the sector and the current tax system which contributes to the cost build-up of locally manufactured textiles.

To make the industry competitive again, the government has introduced a Bill to Parliament to zero-rate VAT of local textiles.

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