The government has been urged to grant tax relief to Small Medium Enterprise (SME) cocoa processing companies to help them thrive in the agricultural sector.
According to the Project Officer, SEND Ghana, Mr Joseph Okyere Osei, some indirect taxes imposed on the small cocoa processing companies had dire consequences on the sector, thereby affecting production.
"Even though, cocoa farmers are tax exempted, some numerous indirect taxes such as production tax, valued added tax imposed on these companies, have dire consequences on them and are unable to thrive as compared to the free zones," he said.
Mr Osei disclosed this at a roundtable discussion on tax exemptions in the cocoa sector organised by SEND Ghana in partnership with OXFAM Ghana, under the "Fair4All" project in Accra last Tuesday.
The meeting was to discuss legislation and tax regulations (redundant tax exemptions) in the cocoa sector and raise awareness among stakeholders and the public about the negative impacts of redundant tax exemptions and the benefits of reform.
Mr Osei, also Lead-Project, Fair4All, said Ghana was noted to be the second largest producer of cocoa in the world, accounting for about 20 per cent of the share of the world's cocoa, next to Cote d'Ivoire which accounts for about 40 per cent of total world production.
However, Act 1984 P.N.D.C.L. 81, hinders cocoa processing companies from purchasing cocoa beans directly from farmers for value addition, thereby causing the farmer to become less competitive on the local and international market, and unable to substantially contribute to economic growth.
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"To worsen the situation, 35 per cent tax, known import duty has been slapped on the SME cocoa processing companies for buying cocoa beans from LBCs to the displeasure of COCOBOD. This disincentivise business, hence, the need to review it to encourage local production of cocoa products," he added.
Mr Osei advocated the review of the import tax (reduce or removal) to address farmers income-gap through reducing export tax, as well as addressing employment issues in the system.
Besides, Act 1984 which created COCOBOD, Tax regulations, he said also posed certain hindrances to the sector and needed to be addressed, adding that tax regulations, were well known to be an important part of the "business climate" in all countries.
"In developing countries like Ghana, this climate has not been that congenial as it promotes inequity especially for small local businesses with limited capital and cannot export processed products," he added.
Mr Osei urged the government to prioritise the local artisanal companies in terms of bureaucracy so that they could compete with the free zones to enable them expand.
Executive Member for Cocoa Farmers Cooperative Association, Issifu Issaka said the government's inability to exempt small cocoa processing companies from indirect taxes might be contributing to the global decline in cocoa production.
He called for the protection of Ghanaians who wanted to enter into cocoa processing for to them compete favourably with the international market.
Leticia Yankey, Cocoa Farmer, for her part, stressed the need for capacity building and provision of resources for cocoa farmers, to take full advantage of the landscapes and increase their incomes.
