Ghana Cancels 5% Capital Gain Tax to attract investors

The Ghanaian government has decided to cancel the 5 percent capital gain tax formerly imposed on all profits by investors on the capital market as stipulated in the government's 2021 budget statement. Osei Kyei-Mensah-Bo Su, the Minister of Parliamentary Affairs, announced this decision to permanently remove listed securities from all capital gain tax payments.

Capital Gains are profits made from investments, and Capital Gains Tax is a tax on the growth in value of investments incurred when individuals and corporations who own those investments decide to sell.

Ekow Afedzie, Managing Director of the Ghana Stock Exchange has described support for the new policy. He believes this will boost the growth of the stock market and attract potential investors into the Ghanaian market.

In a statement to Joy Business, he said, "As I indicated earlier, this is very welcoming news to us and we as managers of the stock market are very grateful to the government for such a bold decision. I believe it will be a game-changer for the growth of the market and many investors will be encouraged to come into the market. This has been a practice in other countries and it has attracted many businesses as well." 

The Managing Director also explained that suspending the tax will go a long way in motivating entrepreneurs in and outside the country to invest in the capital market and the stock exchange in general. 

The Ghanaian Stock Exchange (GSE) which commenced trading in November 1990, currently lists over 42 equities and has a market capitalization of 57.14 billion Ghana cedis. It was incorporated in July 1989 as a private company but changed Exchange status to become a public company in 1994.