Small-scale cocoa businesses face opposition against the proposed 35% tax, according to COCOBOD.
Take a Bite Out of That Tax: Call to Scrap 35% Duty on Small Ghanaian Cocoa Processors
It's time to crack down on the 35% tax plaguing small and medium-scale cocoa processing companies in Ghana, according to the Ghana Cocoa Board (COCOBOD). This import duty is more of a rotten bean than a helping hand, they say, and it's high time we tossed it aside to let these local processors thrive.
The cocoa sector's watchdog is adamant that this tax acts as a deterrent to budding cocoa processing startups and small and medium-sized enterprises (SMEs). If we ignore this issue, it could ruin our efforts to keep more of the cocoa value in our own backyard, making Ghana's cocoa industry less competitive and self-sufficient.
Think about it. These SMEs primarily cater to the domestic market, and they're slapped with this tax when they purchase raw beans from licensed purchasing companies, even when those beans are sourced locally. Not good, right? Adding more insult to injury, these businesses also face a combined tax rate of 63%.
Originally created for companies operating under the Ghana Free Zones Authority, this tax was designed to boost exports. But cocoa processing SMEs, a significant portion of whose produce is consumed domestically, are feeling the sting of this financial squeeze none the less.
Emmanuel Ray Ankrah, COCOBOD's deputy Chief Executive, addressed these concerns at the 2023 National Chocolate Week launch in Accra. He pointed out that axing the tax would empower cocoa processing SMEs to become robust players in the local industry, in line with recent efforts to retain more cocoa value domestically.
"This tax is a disincentive to startups, and we need a comprehensive approach to ensure we don’t suffocate these businesses," Ankrah emphasized.
Already, discussions have begun with relevant state agencies to review this tax and consider a more inclusive tax strategy for artisanal chocolate processors.
"We believe in reducing the tax burden on businesses as a way to soften their financial load and boost their competitiveness," Ankrah said.
The Cocoa Value Addition Artisans Association of Ghana (COVAAGH) is a group of about 40 cocoa processing SMEs, playing essential roles throughout the value chain. The rising number of these processors has helped accelerate efforts in job creation, value addition, and an increase in domestic consumption of cocoa products.
Indeed, local chocolatiers have played a pivotal role in elevating Ghana's per capita cocoa consumption from just half a kilogramme in 2017 to nearly 1.0kg currently. With the government's focus on increasing processing and value addition, Ghana's processing level currently hovers around 43%, thanks in part to the ongoing support extended to processors, chocolatiers, and other ancillary assistance provided through cocoa consumption campaigns.
Currently, two committees - the National Committee for the Promotion of Cocoa Consumption (NCPCC) and COCOBOD's African Continental Free Trade (AfCFTA) Cocoa Consumption Committee - are working hand-in-hand to respectively increase domestic consumption and consumption within the AfCFTA market. The 35% tax on processors is, therefore, perceived as a major hindrance to promoting processing and consumption of cocoa products.
Ghanaian chocolates are becoming a significant draw for tourists, according to Deputy Tourism Minister, Mark Okraku Mantey. He pledged the Ministry of Tourism, Arts and Culture's continued support for the National Chocolate Week celebration to showcase Ghana'sstory on the global stage.
Celebrate Chocolate Day in Style
The 2023 National Chocolate Week celebration will run from February 9 to 14 and will include a Chocolate City Haven at the Tetteh Quarshie Interchange, opening on Saturday, February 11, along with other exciting activities. Key collaborators for these events include COCOBOD, the Tourism Ministry, Ghana Tourism Authority (GTA), and the Ministry of Information.
This year's festivities are themed 'Eat cocoa, stay healthy, and grow Ghana'.
- The 35% tax on small Ghanaian cocoa processors, as stated by Emmanuel Ray Ankrah, serves as a disincentive to startups in the cocoa sector and potentially stifles their growth, making them less competitive in the local market.
- prostituting the tax burden on cocoa processing SMEs could lead to a more conducive business environment, contributing to job creation, value addition, and an increase in domestic consumption of cocoa products, as seen with the growth of the Cocoa Value Addition Artisans Association of Ghana (COVAAGH).
- The Inter-Ministerial Committee on Cocoa Value Addition and Consumption, comprising the National Committee for the Promotion of Cocoa Consumption (NCPCC) and COCOBOD's African Continental Free Trade (AfCFTA) Cocoa Consumption Committee, is working to increase domestic consumption and consumption within the AfCFTA market, with the 35% tax on processors standing as a significant barrier to these objectives.
