Overview of Ghana's Free Zones and Special Economic Regimes
Ghana has established several special economic zones and investment regimes to attract foreign direct investment, promote exports, and stimulate economic growth. These frameworks offer significant tax incentives, streamlined regulations, and enhanced business environments for qualifying enterprises.
Ghana Free Zones Programme
Legal Framework
The Ghana Free Zones Programme is governed by the Free Zones Act, 1995 (Act 504) and administered by the Ghana Free Zones Authority (GFZA). The programme was subsequently enhanced through various amendments and the Ghana Investment Promotion Centre Act, 2013 (Act 865).
Types of Free Zone Operations
- Free Zone Enclave: Designated geographical areas with special customs territory status
- Single Factory Free Zone Enterprise: Individual companies operating under free zone status
- Free Zone Developer: Entities that develop and manage free zone enclaves
- Free Zone User: Companies operating within established free zone enclaves
Key Benefits and Incentives
- Corporate Tax: 0% corporate income tax for the first 10 years, then 8% thereafter
- Import Duties: Exemption from import duties on plant, equipment, machinery, and raw materials
- Withholding Tax: Exemption from withholding tax on dividends paid to non-resident shareholders
- Export Levy: Exemption from export levy and other export-related charges
- VAT: Zero-rated VAT on goods and services for export
- Foreign Exchange: 100% foreign ownership permitted and unrestricted repatriation of capital and profits
Eligible Activities
Free zone enterprises must engage in activities that promote exports and economic development:
- Manufacturing and processing for export
- Agro-processing and value addition
- Information and Communication Technology services
- Commercial and trading activities (minimum 70% for export)
- Warehousing and distribution
- Service provision to other free zone enterprises
One District One Factory (1D1F) Initiative
Programme Overview
The 1D1F initiative, launched in 2017, aims to establish at least one factory in each of Ghana's 216 districts. The programme focuses on agro-processing, manufacturing, and value addition to create employment and promote rural industrialization.
Incentives Under 1D1F
- Corporate Tax Rate: Reduced rate of 20% (compared to standard 25%)
- Import Duty: Exemption on plant, machinery, and equipment
- Land Access: Facilitated access to land through district assemblies
- Utility Support: Priority connection to electricity and water supply
- Technical Assistance: Business development support and training programmes
Ghana Investment Promotion Centre (GIPC) Incentives
Investment Thresholds and Benefits
Under the Ghana Investment Promotion Centre Act, 2013 (Act 865), qualifying investments receive various incentives based on investment size and sector:
Manufacturing Sector Incentives
- Minimum Investment: USD 200,000 for foreign investors, GHS 500,000 for Ghanaian investors
- Import Duty Relief: Exemption on plant, machinery, and equipment
- Locational Incentive: Additional 5% investment allowance for investments outside Accra and Tema
- Investment Allowance: Up to 20% of qualifying capital expenditure
Priority Sectors
Enhanced incentives are available for investments in priority sectors:
- Agriculture and agro-processing
- Manufacturing
- Tourism and hospitality
- Information and Communication Technology
- Healthcare
- Education
- Housing and real estate development
Special Development Zones
Northern Development Authority (NDA) Incentives
The Northern Development Authority Act, 2017 (Act 954) established special incentives for investments in the five northern regions:
- Corporate Tax: 0% for first 5 years, then 12.5% for next 5 years
- Development Allowance: 20% of qualifying capital expenditure
- Accelerated Depreciation: 50% initial allowance on plant and machinery
- Infrastructure Support: Priority access to government infrastructure projects
Middle Belt Development Authority (MBDA)
Similar incentives apply to investments in the middle belt regions, though specific rates and conditions may vary (to be verified).
Tema Oil Refinery Free Zone
The Tema Oil Refinery operates as a specialized free zone for petroleum product processing and petrochemical activities. Companies operating within this zone benefit from:
- Duty-free importation of crude oil and petroleum products
- Preferential corporate tax rates
- Streamlined licensing procedures
- Access to specialized petroleum infrastructure
Application Procedures and Requirements
Free Zones Application Process
- Initial Application: Submit application to Ghana Free Zones Authority with business plan and financial projections
- Site Inspection: GFZA conducts technical evaluation and site visit
- Licence Approval: Board approval and issuance of free zone licence
- Operational Requirements: Compliance with annual reporting and audit requirements
Required Documentation
- Detailed business plan and feasibility study
- Financial statements and proof of capital
- Environmental impact assessment
- Land title or lease agreement
- Shareholders' agreement and company incorporation documents
Compliance and Monitoring
Ongoing Obligations
Free zone enterprises must maintain compliance with:
- Export Requirements: Minimum 70% of production for export markets
- Annual Reporting: Submit annual returns and audited financial statements
- Employment Compliance: Adherence to Ghana Labour Act and employment regulations
- Environmental Standards: Compliance with Environmental Protection Agency requirements
Penalties for Non-Compliance
Failure to meet obligations may result in:
- Suspension or revocation of free zone status
- Recovery of tax benefits previously enjoyed
- Penalties and interest charges
- Prosecution under relevant laws
Recent Developments and Future Outlook
The Ghana government continues to enhance its investment promotion framework through:
- Digital Services: Online application and processing systems
- Sector-Specific Zones: Development of specialized zones for automotive, pharmaceuticals, and technology sectors
- Regional Integration: Alignment with ECOWAS common investment policies and the African Continental Free Trade Area (AfCFTA)
- Infrastructure Development: Expansion of industrial parks and supporting infrastructure
Investors should consult with the relevant authorities and professional advisors to ensure compliance with current regulations and maximize available benefits under Ghana's evolving special economic zone framework.