represented by the then Ministry ofFinance and Economic Planning, enteredinto a Master Facility Agreement (MFA) withthe China Development Bank Corporation,for an amount of US$3,000,000,000.00 toundertake various infrastructure projects inthe country. The Agreement was approved byParliament on 26th August, 2011 and wassigned on the 16th December, 2011 and anAddendum to the MFA also approved on21st February, 2012, by the House. Thewestern corridor gas infrastructureproject, as a subsidiary agreement, wasapproved by the House forms part of theCDB facility.
Required waiver To ensure that government does notincur additional cost on the project, andin line with the EPC contract, the GhanaNational Gas Company, through theMinistry of Finance, is seeking a waiverof import project related taxes, includingimport VAT, EDAIF, NHIL, ECOWAS Levy,destination inspection fees, withholdingtax liabilities on local and foreign supplies,and other related impost on import ofgoods, equipment and services on thewestern corridor gas Infrastructureproject. The Ghana Revenue Authority hasassessed the applicable taxes, duties andlevies on equipment, materials and othergeneral items required for the executionof the project, and for which exemptionsare being requested, and have arrived at atotal tax liability of up to one hundred andfifty- two million, twenty-eight thousandand sixty-six United States dollars(US$152,028,066.00).
Observation The Committee having carefullyscrutinised the request made thefollowing observations:
Legal basis for the waiver The Committee noted that granting ofthe tax exemptions by the government isan obligation under the EPCC contract,signed between GNGC and SinopecInternational Service Corporation(contractor), under which GNGC under-took as part of its obligations, to amongothers, be responsible for and pay anyand all taxes with respect to the agreementand to reimburse the contractor for alltaxes imposed on the contractor by thegovernment or any government authority. The exemptions are therefore to fulfillGovernment's commitment under article9.5 of the contract, and thus facilitate thework of Sinopec and ensured a timelycommissioning of early gas infrastructureand avert further gas flaring.
Assessment of tax liabilities and thewaiver required The Committee noted that the GhanaRevenue Authority, upon thoroughassessment, recommended the waiver oftax liability amounting to one hundred andfifty-two million, twenty-eight thousandand sixty-six United States dollars(US$152,028,066.00), on materials andequipment, including other related taxesfor the Western Corridor Gas Infrastruc-ture Project, with total CIF value ofUS$438,715,758. The breakdown of the taxliabilities into the various tax componentsis as follows: