Member of Parliament

Obuasi West Constituency

Republic of Ghana

23 August 2023
EDITOR
THE FOURTH ESTATE
ACCRA

Dear Editor,

RE: HOW A HOTEL WAS DESIGNATED AS 1D1F AND

GRANTED $4 MILLION TAX EXEMPTION

Please refer to the publication by Victoria Enyonam Adonu captioned as above and dated
21 August 2023 in The Fourth Estate . The publication claimed that the Ministry of Finance
had requested, and Parliament had granted tax exemption under a one-district-one-factory
programme for the construction of a hotel. This claim is false.

The statement in the said publication that, “The Ministry of Finance wanted the relief
granted in line with the tax exemption regime under the One District, One
Factory Programme.” is inaccurate. Nowhere in the Minister for Finance’s memorandum
to Parliament was there any reference to the one-district-one-factory initiative. Please find
attached the Minister for Finance’s memorandum to Parliament, which has been in public
records since July 2022 when it was laid.

Paragraph 1.1 of the memorandum states as follows:

“Parliament is respectfully invited to consider and approve the waiver of Import

duties, Import NHIL, Import GETFUND, Import VAT, and EXIM levy and
domestic VAT, amounting to Ghana Cedi equivalent of Six Million, Three
Hundred and Eighty-Nine Thousand and Four Hundred and Twenty-Eight United
States Dollars (US$6,389,428) in favour of 4-MAC Ltd a wholly Ghanaian owned
Limited Liability Company incorporated in Ghana who is applying for a Strategic
Investor, under section 26 (4) of the GIPC Act 2013, Act 865 on materials and
equipment for the development of the Meridien Hotel.”

I respectfully request The Fourth Estate to correct the wrong impression occasioned by the
said inaccurate publication.

It is not hard to see that the inaccurate publication by The Fourth Estate relied on
references to one-district-one-factory in the Finance Committee’s report on the referral.
Those references in the Committee’s report were unnecessary and erroneous. They were
immaterial to the Committee’s recommendation to Parliament.

Parliament House, Accra, Ghana. +233 244 838 735 +233 204 838 735 kkwarteng@parliament.gh kwaku@kwarteng.com
 Indeed, paragraph 5.2 on page 5 of the Committee’s report (copy here attached), states
the justification for the Committee’s recommendation as follows:

“The Committee noted that Subsection 4 of the Ghana Investment Promotion

Centre (GIPC) Act 2013, Act 865, authorizes the board of the Authority to
negotiate specific incentive packages for strategic investments in addition to
the incentives available to any enterprise under the tax, customs and other
laws. This is for the purpose of promoting identified strategic or major
investments. The Board of GIPC have therefore satisfied itself that the
Construction of the Le MERIDIEN Hotel is a strategic investment that deserve
to be supported under this Act and intends to extend the needed support to the
investors to realise their objective.”

So, it is evident from all the records that the Ministry of Finance’s request for a tax waiver
of US$6,389,428 was in favour of Mac4 Ltd as a strategic investor under the GIPC Act,
2013, and the approval of a reduced figure of US$3,919,628 by Parliament was also in
accordance with same.

The suggestion in the said publication that Mac4 Ltd has been granted a one-district-one-
factory tax waivers for the construction of a hotel was wrong, and the Committee would
be grateful if this inaccuracy could be corrected.

Thank you.

Kwaku Kwarteng
(Chairman, Finance Committe of Parliament)

Parliament House, Accra, Ghana. +233 244 838 735 +233 204 838 735 kkwarteng@parliament.gh kwaku@kwarteng.com
 REQUEST FOR PARLIAMENTARY APPROVAL

SUBMITTED BY:

KEN OFORI-ATTA
(MINISTER FOR FINANCE)

TITLE:

REQUEST FOR APPROVAL FOR THE WAIVERS OF CUSTOMS DUTIES, TAXES

AND LEVIES ON MATERIALS AND EQUIPMENT AND SERVICES FOR THE
DEVELOPMENT OF THE MERIDIEN HOTEL BY 4-MAC LTD

/?""11jULY, 2022
 I. ACTION REQUIRED

l.1 Parliament is respectfully invited to consider and approve the waiver oflmport duties, Import
NHIL, Import GETFUJ:,!D, Import VAT, and EXIM levy and domestic VAT, amounting to
Ghana Cedi equivalent of Six Million, Three Hundred and Eighty-Nine Thousand and Four Hundred
i' and Twenty-Eight United States Dollars (US$6,389,428). in favour of 4-MAC Ltd a wholly
Ghanaian owned Limited Liability Company incorporated in Ghana who is applying for a Strategic
Investor, under section 26 (4) of the GIPC Act 2013, Act 865 on mateiials and equipment for the
development of the Meridien Hotel.

1.2 Executive approval was granted to 4 Mac Limited as a Strategic Investor, pursuant to
section 26 (4) of the GIPC Act 2013, (Act 865) on the recommendation of the Board of the Ghana
Investment Promotion Centre (GJPC).

2. BACKGROUND

2. I The Prope1ty will be known as Le Meiidien. The facility is expected to open in 2025 and it is
expected to be a full-service property with I 61 guest rooms, two restaurants, two bars/lounges and
two coffee shops, 709 m 2 of meeting space, an outdoor pool, an exercise room, a spa, a business
Centre, a gift shop, a salon and a clinic and appropiiate back-of-the-house facilities. The Operator
will be Marriott International.

2.2 The hotel site is located on Parcel I 4 Patiice Lumumba Road, Airport Residential Area, Accra,
Ghana. The site measures approximately 6,479 m2 • The site is a near perfect rectangle in shape.

2.3 The topography is flat, with an entrance in the middle of the dimension facing on to the Patiice
Lumumba Road. The elevation of the site is flat and on the same gradient as the nearby roads.

2.4 The site of the Hotel is in a residential suburb which supports the greater Accra Central Business
Distiict. About I 00m to the east of the site lies a corporate office block, Capital Place. To the west
is found a competitor hotel, Tang Palace. To the south is to be found a residential dwelling, and
Patrice Lumumba Road is running on the east of the site. This neighbourhood is interspersed with
medium to high value residences and is home to a fairly large number of the diplomatic corps.
2.5 The following modes of transport allow access to the site:

• The roads in Accra are in fairly good condition and enjoy some maintenance. Patrice
Lumumba Road is a major single carriageway that enjoys significant use, and it runs in
front of the site. Road traffic in the greater Accra is well signposted and is controlled by
traffic lights.
• The bus system is not a predominant transport mode for the hotel market in Accra.
• Accra City is the home ofKotoka International Airport, the largest airport in Ghana. This
airport also plays an important role in moving passengers both domestically and
internationally. Flights from Johannesburg and from London take approximately six
hours to arrive in Accra, thus making this airport one of the most central airports in West
Africa.

2.6 The visibility of the site is excellent due to its height of eight floors above the ground. The Tang
Palace for instance, one of the proposed hotel's primary competitors, comprises only three floors,
making it invisible behind the proposed hotel from Patrice Lumuba Road.
With its proximity to Kotoka International Airport, Ghana's diplomatic corps, good road access and
visibility, the proposed hotel enjoys great access to the corporate market that exists in Accra .

.r'1::..:.:..1. ____ _
2.7 The location of the proposed hotel has many positive attributes, with good access and visibility,
a highly sought-after neighbourhood and proximity to demand generators. The size, planning and
physical characteristics of the site allow for an efficient building. The qualLty of a hotel's physical
facilities has a direct influence on its marketability and attainable occupancy and average rate. The
design and functionality of the structure can also affect operating efficiency and overall profitability.

3. DlRECTORS PROFlLE

3.1 The Project is being promoted by 4-MAC Ltd a wholly Ghanaian owned Limited Liability
Company incorporated in Ghana.

3.2 The company has two directors, Mr. Jeffery Kwaku Amponsah and Madam Vida Amankwaa,
both are Ghanaian citizens.

3.3 Mr. Jeffery Amponsah owns 100% shares of the company and doubles as the Managing Director
of the company. He was born in Kumasi in l 959 and has decades of experience in business
management.

3.4 In 1992, Jeffery established Byes and Ways Ltd which deals in the manufacture of treated wooden
poles for Power and Telecommunication transmission. He is a 100% owner and the Managing
Director of the company.

3.5 Through his ingenuity, Byes and Ways has grown from a humble begim1ing to a world class
wood treatment facility with of 70% market share in Ghana. Byes and ways currently supply most
of the wooden poles used by the government for the Rural Elecllification Project, Self Help
Electrification Project, Electricity Company of Ghana, and other international companies engaged in
the power transmission sector.

3.6 In 2009, Byes and Ways, under the able leadership of Jeffery, diversified into commercial
property development with a successful completion of the Palace Mall on the Spintex road, Accra.
The facility was leased to the Palace Group for the running of the mall for a period of 20 years.

3. 7 In 201 O, Jeffery acquired 4-MAC ltd - which had a l .6 acre parcel of land situated on the Patiice
Lumumba Road, Airp01t Residential Arca, Accra for the development of an international hotel.
Subsequently another parcel of land (1.8 acre) adjacent the l.6 acre property was acquired making a
total of 3 .4 acre land on which the hotel project is being constructed.

3.8 In 2017, Jeffery led a team from 4-MAC Ltd to negotiate and signed a management agreement
with Marriott International to operate the hotel under one of Marriott's brands - LE MERIDIEN.

3.9 From inception of the project Jeffery, through 4-MAC Ltd, has invested over $20m of the $60m
estimated project cost, to cover cost of 3.4 acre land on which the project is situated and completion
of 95% of civil and structural works.

3 .10 The Development Team includes

• Architects - Bentle Associates International, Johannesburg

• MEP - Samadhin Associates - Dubai
• Quantity Surveyors and Cost Consultants - Rider Levett Bucknall (RLB), Johannesburg
• IT/AV/Security- Infosight Solutions - Dubai
• Lighting - Virtual Energy - London
• Interior Designs -DIAD, Johannesburg
• Project Management - Pridam Investment Ghana Ltd
• FLS - Sefya Solutions, Johannesburg
• Kitchen - MCTS, Dubai
• Feasibility Studies - HVS-EMEA, Johannesburg
4. Propose financial strncture

4.1 The total cost of the project is estimated at USDS0 million which will be financed through
equity and debt. The EBITDA (after FF&E reserve) forecast in the ten-year projection of income and
expense as the basis for an analysis of cash flow and return on investment. In addition to EBITDA,
the key components of this analysis are the development cost estimates and estimates of the proposed
finance structure to be adopted for the project.

4.2 In the following two tables, illustrates the development cost estimates, the proposed financial
structure and the anticipated phasing of the capital injection in the total development.
The analysis indicates that the project internal rate of return (IRR) for the total (unleveraged)
investment and equity investment (leveraged) is likely to be as follows.

• The overall project IRR is 8.20%

• The leverage project IRR is 8.30%.
• Employment at construction phase direct-408 and indirect-1,020
.
• Employment at operational phase; direct-145 and indirect-435

4.3 Detailed explanation is found in the feasibility report or study.

'ABLE 8·2 PROPOSED FINANCIAL STRUCTURE AND CAPITAL INJECTION- PROPOSED LE MERI DIEN
(US$)
Percentage of
roposed Financial Structure Amount Total

Total Cost 49,570,056 100%

Debt 19,828,022 40%

Equity 29,742,034 60%

Land Cost

Development Equity 29,742,034

Comtruction Period
Z021 2022 2023 2024 Total

Construction Phasing
'" 31% 5% 20% 44¾ 100%

Cost Excluding Land Cost 15,366,717 2,478,503 9,914,011 21,810,825 49,570,056

Proposed Capital Injection 2021 2022 Z023 2024 Total

Equity Injection 15,366,717 2,478,503 9,914,011 1,982,802 29,742,034

Debt Injection 19,328,022 19,828,022

otal 15,366,717 2,478,503 9,914,011 21,810,825 49,570,056

20,000,000

15,000,000

10,000,000

5,000,000

0
2021 2022 2023 2024

~ Equity r, Debt

Sourc,:,: HVS's htimJWs

TABlE l· RETURN ON INVESTMENT ANAlYSIS-PROPOSED lE MERIOIEN 1usi 00!S)
Proposed Capital Injection 2011 1012 10ll 1024 Total
Equitv 15,367 2,479 9,914 1,9Bl 19,742
Debt 19,828 19,818
Total Construction Cost 15,367' 2,479' 9,914' 21,811 49,570
Net Operating Income and Debt Payments
1015 1026 1021 1018 1019 1030 1031 2032 10ll 2034
Net Operating Income 1,19l 2,981 · 4,001 4,487 4,467 4,556 4,647 4,740 4,835 4,931
DebtSeNice 1,7l5 1,735 1,735 1,735 1,735 1,735 1,7l5 1,7l5 1,735

Net Operating Income after Debt

Service ·442 1,246 2,265 2,765 2,731 2,820 2,911 l,005 3,100 4,931
OVERAlllRR IRR 2011 2022 1023 1025 2016 1027 2028 2029 2030 2031 2032 2033 2034
Net Operating Income 1,293 2,981 4,001 4,487 4,467 4,556 4,647 4,740 4,835 59,702
Total Investment 15,367 2,479 9,914 21,811
Net Project Cash Flow 8.20% ·15,367 ·2,479 -9,914 ·20,518 2,981 4,001 4,487 4,467 4,556 4,647 4,740 4,835 59,702
LEVERAGED IRR IRR 1021 1022 2013 2015 2016 1017 2018 2019 2030 1031 1032 10331034'
Net Operating Income after
Debt Service -442 1,246 2,265 2,752 2,731 2,820 2,912 3,005 3,100 43,386
Equity Investment 15,367 2,479 9,914 1,983
Net Cash Flow to Equitv 8.lll¾ ·11,367 ·2,479 -9,914 ·2,425 1,246 2,265 2,752 2,731 2,820 2,912 3,005 3,100 43,386
2034~ Equity on sa!e after paying outstanding !oan plus Net Operating Income for the year

These projections are provided for indicative purposes only and should not be used to influence any i1westmentdedsion,
Source: feasibilitv study by HVI

5. JUSTIFICATION FOR TAX EXEMPTION

5.1 Subsection 4 of the Ghana Investment Promotion Centre (GJPC) Act 2013, Act 865, states
that "For the purpose of promoting identified strategic or major investment, the Board may in
consultation with appropriate government agencies and with the approval of the President.

a. specify priority areas of investment and their applicable benefits and incentives; and
b. negotiate specific incentive packages for strategic investments in addition to the incentives
available to any enterprise under the tax, customs and other laws referred to in subsection (1 ).

5.2 Accordingly, the Attorney General office provided clarity on section 26 subsection 4 which
said that Parliamentary ratification would be required.
6. TAX ASSESSMENT/FISCAL IMPACT

The Ghana Revenue Authority (ORA) has determined the quantum of taxes payable on mate1ials and
equipment to be procured under the project. Gross taxes per the ORA computation amounted to Six
Million, Three Hundred and Eighty-Nine Thousand and Four Hundred and Twenty-Eight United
States Dollars (US$6,389,428). The breakdown is summadzed below:

Summary of duties for Le Meridien Hotel Project

Tax to be exempted Amount (USD)

Import A Import Duty 1,822,505
ImportNHIL 279,189
Import GETFUND 279,189
Import VAT 1,465,740
EXIMLevy 73,006
Subtotal 3,919,628
Local B Domestic VAT 2,469,800
Subtotal 2,469,800
Total(A+ B) 6,389,428

7. CONCLUSION

From the above submissions and the economic and financial analysis of the project indicate that it is
a viable project and therefore worthy of support. Additionally, the project has met all the
administrative requirements and has all the relevant permit to commerce construction.

Parliamentary approval is therefore respectfully being sought for the waiver of Import duties, Import
NHIL, Import GETFUND, Import VAT, and EXIM levy and the Domestic VAT in favour of 4-MAC
Ltd a wholly Ghanaian owned Limited Liability Company incorporated in Ghana who is applying
for a Strategic Investor, under section 26 (4) of the GIPC Act 2013, Act 865.

/
_// ( r;,1
\ \ \ \I ·"--
~'-~
KEN 0~01;"<-1-Al'TA
(MINISTER FbR FINANCE)
Attachment

l. Executive approval for the tax waiver

2. Tax Assessment
3. Feasibility report
4. GIPC Board letter
5. Other documents
 IN THE SECOND SESSION OF THE EIGHTH PARLIAMENT OF THE FOURTH REPUBLIC OF
GHANA

REPORT OF THE FINANCE COMMITTEE ON THE REQUEST FOR WAIVER OF IMPORT

DUTIES, IMPORT VAT, GETFUND LEVY, NHIL, EXIM LEVY AND DOMESTIC VAT
AMOUNTING TO THE GHANA CEDI EQUIVALENT OF SIX MILLION, THREE HUNDRED
AND EIGHTY-NINE THOUSAND, FOUR HUNDRED AND TWENTY-EIGHT UNITED
STATES DOLLARS (US$6,389,428) ON MATERIALS AND EQUIPMENT TO BE
PROCURED FOR THE DEVELOPMENT OF THE MERIDIEN HOTEL BY 4-MAC LIMITED.

1.0. INTRODUCTION
The request for waiver of Import Duties, Import VAT, GETFund Levy, NHIL, EXIM
Levy, and Domestic VAT amounting to the Ghana Cedi equivalent of Six Million,
Three Hundred and Eighty-Nine Thousand, Four Hundred and Twenty-Eight
United States Dollars (US$6,389,428) on materials and equipment to be procured
for the development of the Meridien Hotel by 4-Mac Limited was presented to
the House on Monday, 25th July, 2022 in accordance with Article 174 (2) of the
Constitution.

Pursuant to Orders 169 of the Standing Orders of the House, the request was
referred to the Finance Committee for consideration and report.
The Committee subsequently met and discussed the request with the Hon.
Deputy Ministers for Finance, Dr. John Ampontuah Kumah as well as officials from
the Ministry of Finance.

The Committee hereby submits this report to the House pursuant to Order 161(1)
of the Standing Orders of Parliament.

The Committee is grateful to the Hon. Deputy Minister and Officials for attending
upon it and assisting in the deliberations.

2.0. REFERENCES
The Committee referred to and was guided by the following documents
amongst others during its deliberations:
The 1992 Constitution of the Republic of Ghana;
The Standing Orders of the Parliament of Ghana;
The Public Financial Management Act, 2016 (Act 921) and
Guidelines for the Approval of Tax Waiver Under 1D1F Program.

3.0. BACKGROUND

As part of the Governments industrialization agenda, the Ministry of Trade and

Industry is facilitation the establishment of industries across the country under the
One District One Factory Program. As part of the program the Government
intends to extend tax incentives to a number of factory that seek to partner
government in its industrialization drive. To this end, the Government intends to
grant tax reliefs for the establishment of the Le Meridien Hotel, a hospitality
facility in the Greater Accra Region.

Le Meridien Hotel is Hospitality facility which is expected to open in 2025 and it is

expected to be a full-service property with 161 guest rooms, two restaurants, two
2
bars/lounges and two coffee shops, 709 m² of meeting space, an outdoor pool,
an exercise room, a spa, a business Centre, a gift shop, a salon and a clinic and
appropriate back-of-the-house facilities. The property is to be operated by
Marriott International.

The hotel is located on Parcel 14 Patrice Lumumba Road, Airport Residential

Area, Accra, Ghana. The site measures approximately 6,479 m². The Hotel is to
be located in a residential suburb which supports the greater Accra Central
Business District. With its proximity to Kotoka International Airport, Ghana's
diplomatic corps, good road access and visibility, the proposed hotel is
expected to benefit immensely from the corporate market that exists in Accra.

4.0. REQUIRED WAIVER

To ensure the execution of the projects and in line with the tax exemption regime
under the One District One Factory Program, the Ministry of Finance is seeking
Parliamentary approval to exempt import related taxes and domestic VAT up to
the Cedi equivalent of US$6,389,428.00 on materials and equipment to be
imported and procured domestically for the Construction of the facility. The
Ghana Revenue Authority (GRA) has determined the quantum of taxes payable
on materials and equipment to be procured under the project.

Gross taxes per the GRA computation amounted to Six Million, Three Hundred
and Eighty-Nine Thousand and Four Hundred and Twenty-Eight United States
Dollars (US$6,389,428). The breakdown is summarized below:

Table 1: Summary of Waivers Required for Le Meridien Hotel Project

Tax Category Tax Type Amount (US$)

Import Related Taxes (A) Import Duty 1,822,505
Import NHIL 279,189

3
 Import GETFUND 279,189
Import VAT 1,4695,740
EXIM Levy 73,006
Sub Total 3,919,628
Local Taxes Domestic VAT 2,469,800
Sub Total 2,469,800
Grand Total 6,389,428

5.0. OBSERVATION
The Committee having carefully scrutinised the request, made the following
observations:

5.1. Assessment of Tax Liabilities and the Waiver Required

The Committee noted that, in an effort to speed up industrialization and in line
with government overall policy of granting tax reliefs to new companies under
the One District One Factory programme, the government intends to grant tax
reliefs on equipment and materials to be imported for the execution of the Le
Meridien Hotel projects. This is consistent with governments overall policy to
propel industrial growth under the 1D1F program. The project for the
construction will also contribute significantly to creation of employment in the
Tourism and the Hostility Sector.

To achieve these objectives, the Ministry of Finance through the Ghana

Revenue Authority has assessed the applicable taxes, duties and levies on
equipment, materials and other items to be imported or procured locally for the
project and have recommended a total tax liability of up to the Cedi equivalent
of US$6,389,428 for which exemption should be granted.

4
5.2. Justification of the Exemption

The Committee noted that Subsection 4 of the Ghana Investment Promotion

Centre (GIPC) Act 2013, Act 865, authorizes the board of the Authority to
negotiate specific incentive packages for strategic investments in addition to
the incentives available to any enterprise under the tax, customs and other laws.
This is for the purpose of promoting identified strategic or major investments. The
Board of GIPC have therefore satisfied itself that the Construction of the Le
MERIDIEN Hotel is a strategic investment that deserve to be supported under this
Act and intends to extend the needed support to the investors to realise their
objective.

5.3. Compliance with Tax Obligations

The Committee observed that 4-Mac Limited, the company implementing the
project provided tax clearance certificate as proof of having met its tax
obligations to the State. Officials from GIPC further informed the Committee that
submission of tax clearance is one of the requirements for the approval of
investment as a strategic Investor under section 28(4) of the GIPC Act, 2013 (Act
865).

5.4. Job Creation

The Committee was informed that the Le Meridien Hotel Limited is a Four Star
Hotel to be located at the heart of Accra. The facility which is expected to be
opened in 2025 will provide 161 executive guest rooms, two restaurants, two
bars/lounges and two coffee shops, 709 m² of meeting space, an outdoor pool,
an exercise room, a spa, a business Centre, a gift shop, a salon and a clinic and
appropriate back-of-the-house facilities. The Hotel will be operated by Marriott
International in accordance with internal operational standards in the hotel
industry.
5
The Hotel is expected to create 406 direct jobs and about 1,000 indirect jobs at
the construction phase. At its operational phase, the facility will create some 145
direct jobs and 435 indirect jobs.

6.0 DOWNWARDS REVISION OF THE AMOUNT TO BE WAIVED

The Committee noted that included in the taxes to be waived was domestic
Value Added Tax which is a domestic indirect tax. The Committee however
considered that in the light of the new tax exemptions regime, domestic VAT
should be removed from the basket of waivers. The table below shows the
recommended tax lines to be waived.

Table 1: Summary of Revised Waivers for the Le Meridien Hotel Project

Tax Category Tax Type Amount (US$)

Import Related Import Duty 1,822,505
Taxes (A) Import NHIL 279,189
Import GETFUND 279,189
Import VAT 1,465,740
EXIM Levy 73,006
Grand Total 3,919,628

ATTACHMENT: Please find attached as APPENDIX the details of the import

taxes to be waived as assessed by the Ghana Revenue Authority (GRA).

7.0. CONCLUSION

The Committee having examined the request is convinced that waivers for
which the Committee recommends approval are necessary for the execution
of the project and also meet all the requirement of the new exemptions regime.

6
The Committee therefore recommends to the House to adopt its report and
approve by Resolution the request for waiver of Import Duties, Import VAT,
GETFund Levy, NHIL and EXIM Levy amounting to the Ghana Cedi equivalent of
Three Million, Nine Hundred And Nineteen Thousand, Six Hundred And Twenty-
Eight United States Dollars (Us$3,919,628) on materials and equipment to be
imported for the development of the Meridien Hotel by 4-Mac Limited in
accordance with Article 174(2) of the 1992 Constitution and Order 169 of the
Standing Orders of the Parliament of Ghana.

Respectfully Submitted.

HON. KWAKU A. KWARTENG JOANA A. S. ADJEI (MRS.)

CHAIRMAN, FINANCE COMMITTEE CLERK, FINANCE COMMITTEE

25th November 2022