Selected Medicines Get 30% VAT Exemption
Ghana’s local pharmaceutical manufacturing industry has received a big boost following Parliament’s approval of Value Added Tax (VAT) exemptions on selected medicines that correspond to a thirty percent (30%) reduction on the NHIS tariffs on medicines.
The exemption is expected to make about thirty percent (30%) savings on the exemptions of VAT on the selected products; a Committee report on Subsidiary legislation has indicated.
Chairman of the Committee, Mahama Ayariga presented the report, the VAT (Exemption of Active Ingredients, Selected Inputs and Selected Drugs or pharmaceuticals) (Amendment) Regulations, 2017, the exemption covered 552 Active Pharmaceutical Inputs and excipients and 483 Imported finished Pharmaceutical products to Parliament last Friday.
According to him, the current exemption list is 352 Active Pharmaceutical Inputs and excipients and 118 Imported finished Pharmaceutical products. The list of Active Pharmaceutical ingredients includes packaging materials such as bottles, caps, drug information leaflet and other inputs.
The imported finished Pharmaceutical products include vaccine sera, immunoglobulins, medicines for HIV, TB, cancer as well as psychotropic.
The list of exemption of VAT on the selected products is to give leverage to the local manufacturers to make them competitive as part of efforts targeted at building the local industry.
The Committee’s report indicated that the annual reimbursement bill of the NHIA for medicine to service providers is about GH₵800 million.
Current statistics show that, 70% of medicines consumed in the country are imported whilst 30% are locally produced.
The VAT exemption would therefore give local manufacturers the space for expansion to be able to manufacture for both local consumption and export.
Chairman of the Committee, Mahama Ayariga stated that: “The exemption would reduce the cost of production which would consequently place more money in the hands of pharmaceutical companies and lead to the downward adjustments of prices of the selected pharmaceutical products.
This is expected to enable the Pharmaceutical industry to expand and create more job opportunities for the unemployed.
Medicines to be exempted from the VAT include most of the medicines on the list of drugs paid for by the NHIA.
Source: thepublisher/Christian Kpesese