Ghana to offer automakers tax breaks to set up manufacturing plants

Ghana will offer tax breaks of up to 10 years to automakers that set up local manufacturing plants, as the government seeks to attract international companies such as Volkswagen AG and Nissan Motor Co.

Volkswagen and Nissan both agreed last year to set up auto-assembly plants if Ghana signed off on an official incentive plan, while Renault SA said in January it would consider a similar move. In March, Toyota Motor Corp. and Suzuki Motor Corp. announced a joint venture to produce vehicles in the nation.

Ghana’s move to lure carmakers follows South Africa, which has attracted seven manufacturers including Renault, Nissan and Toyota with tax incentives. That’s produced one of the bright spots of an otherwise moribund economy, accounting for about 7% of GDP.

The full 10-year tax break will only apply to companies building whole vehicles in Ghana, though a five year holiday will be available for partial manufacturing, Trade Minister Alan Kyerematen said in a presentation.

Import duties on new and used vehicles will be increased to 35% from 5%-20% to encourage the purchase of locally built units, while bringing in cars, which are older than 10 years, will be banned, he said.