Ghana, Iran discuss double taxation agreement

Ghana and Iran are negotiating agreements on the avoidance of double taxation – according to a Ghana News Agency report.

The report indicated that this was one of the outcomes of the Fourth Session of the Ghana and Iran Permanent Joint Commission for Cooperation in Accra. If the agreement is sealed, Iran will be the eighth country that Ghana has Double Taxation Agreements (DTAs) with.

Ghana currently has double taxation agreements with seven countries and they are France, The UK, Belgium, Italy, Germany South Africa and Switzerland.  According to the Ghana Investment Promotion Centre (GIPC), “Ghana uses the instrumentality of Double Taxation Agreements to rationalize the tax obligations of investors who come from global tax sourced jurisdictions with a view to saving the affected investors from the incidence of double taxation by both their home governments and the host country.

An agreement on the avoidance of double taxation means that a foreign business in Ghana will not have its income taxed in Ghana and in the country of its origination. Depending on the agreement between the country or entity, it could be taxed in one country.

The GIPC believes investment capital can be eroded by taxation and that through the avoidance of double taxation, more investment capital can be secured.

Questions regarding the benefit of these agreements have been raised given the number of Ghanaian businesses in countries with which it has double taxation agreements.

The incidence of double taxation has been inimical to business operations of mostly transnational corporations who are engaged in intra-firm transactions and transfer pricing according to the UNCTAD.

The unavailability of double taxation treaties could lead to tax evasion by companies; hence treaties on avoidance on double taxation are seen as incentives.

By Dode Seidu

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