Ghana risks losing its position as a top mining investment destination due to what the Ghana Chamber of Mines describes as a harmful tax regime.
Ahmed Dasana Nantogmah, Acting Chief Executive of the Chamber, told JoyNews’ PM Express Business Edition on Thursday, May 22, that it is driving exploration companies to more investor-friendly countries like Kenya and Côte d’Ivoire.
“We’re losing to Kenya and Côte d’Ivoire because of bad tax policy,” he said.
His concerns come in the wake of the government’s imposition of a 3% levy on the gross production of mining firms, coupled with the introduction of Value Added Tax (VAT) on exploration activities.
“Exploration is the lifeline of mining,” Mr Nantogmah stressed.
“Now there’s VAT on exploration. Most of the companies in that space are risk takers, but they are paying VAT on assay and drilling, which is the highest cost of exploration.”
He explained that exploration companies are already struggling under heavy financial risks, and these taxes are only compounding the problem.
“Imagine this: you put $10 million into exploration. You don’t make a find. But you’ve paid VAT on it. That VAT will not be refunded. It is money thrown down the drain,” he said.
According to him, these policies are making Ghana increasingly unattractive compared to its regional peers.
“If you put that burden on exploration companies, which are mostly small and don’t have the financial muscle to absorb such losses, they’ll go elsewhere.
“And that’s what’s happening. They are moving to places like Kenya and Côte d’Ivoire, where they don’t pay this VAT.”
Mr Nantogmah warned that if this trend continues, not only will Ghana lose out on new discoveries, but even existing mining operations could eventually collapse due to the absence of a pipeline of new projects.
“These companies go to jurisdictions where their risks are acknowledged and policy is predictable. Right now, we’re creating an environment where Ghana is losing its competitiveness,” he noted.
The Chamber of Mines is calling on government to urgently review the tax measures, especially the VAT on exploration, to prevent a total erosion of investor confidence in the mining sector.
“This is not just about money, it’s about the future of Ghana’s mining industry,” Mr Nantogmah concluded.
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