The Ghana Stock Exchange (GSE) has assured that it will continue pushing for government to restore the exemptions on capital gains tax and the 3 percent rebate on income taxes for listed companies during the first three years of their listing on the bourse.

Managing Director of the GSE Kofi Yamoah told the B&FT -- on the side-lines of listing Bayport Financial Limited’s GH¢78.5million medium-term debt instrument -- that despite the shock of the exemptions’ removal, the exchange is not relenting in its efforts to get government to review its decision.

“We have sent a proposal to the Ministry of Finance to establish our displeasure about the fact that those incentives are no longer in the new Income Tax Act, and we have followed up by having a meeting with the ministry; so we are waiting on the ministry to come out with a decision,” he said.

After the introduction of a raft of tax increments and additional levies on petroleum products, income tax and utility tariffs, institutions and labour unions as well as the public have hit out at government for being ‘insensitive’ toward the welfare of Ghanaians.

Organised Labour last week embarked on a demonstration to state their displeasure over the Energy Sector Levies Act 2015, as well as hikes in electricity and water tariffs.

After the demonstration, government has now been compelled to come to the table and discuss a reduction in the increment on utility tariffs; an announcement is expected in the coming days.

Additionally, opposition from several institutional unions has forced government to suspend the 1 percent tax on interest earned from banks and investments. Moreover, government has also reduced the Withholding Tax on transactions from 15 percent to 7.5 percent.

The exchange is thus hoping to get government to reverse the capital gains tax entirely, since the move serves as a disincentive to prospective companies that seek to list and to investors who are looking at fleeing to more favourable markets.

“We are respectfully asking the ministry, parliament and the GRA to reverse the capital gains tax, because these incentives are critical to the market’s success,” he added.

In the West African sub-region the stock exchanges of Nigeria and the Francophone markets have zero capital gains tax; and according to Mr. Yamoah capital gains tax is making the GSE uncompetitive just in the sub-region, let alone Africa.

He added that he is more interested in protecting retail investors who trade on a daily basis and help improve liquidity on the stock market.

“We build this market for retail investors because they constitute the bigger share on the market and do business on a day to day basis and create liquidity. Once in a while the big institutional holders sell, but the liquidity is created by the retail investors who trade on a day to day basis.”

Already, Deputy Finance Minister Mona Quartey has given indications that government has listened to the concerns of players in the capital market and is working round the clock to come up with a concrete solution to the exemptions.

“The recent issue of capital gains tax and market reforms has been heard by government. Government will continue to promote a competitive environment to ensure that institutions are well motivated to invest in improving productivity, efficiency and cost-effectiveness,” she said.