Policy debate around investment taxation

The Business & Financial Times recently highlighted calls from market participants for permanent relief from capital gains tax on securities, framing it as a key constraint on investment activity and portfolio rebalancing. At present, Ghana’s Income Tax Act taxes gains from the disposal of chargeable assets, including certain securities, as part of assessable income. While the law provides specific exemptions for long-term government securities and some approved collective investment schemes, there is no broad, market-wide permanent exemption for listed equity or corporate bond disposals.

Market actors see this as a drag on liquidity. Asset managers argue that each portfolio rotation carries a tax friction that erodes returns and can deter investors from realising gains and reallocating capital. Brokerage firms and investment advisers are therefore pushing for a clearer, more generous regime that permanently excludes traded securities from capital gains tax, particularly for long-term investors. They contend that such reform would make Ghana’s market more competitive against regional peers that either do not tax capital gains on listed securities or apply lower effective rates.

Policymakers face a delicate balance. Capital gains tax contributes to non-oil tax revenue and is part of a broader effort to strengthen domestic resource mobilisation. However, the push from the market comes at a time when Ghana is aiming to deepen its capital markets, attract more foreign portfolio flows, and support local institutional investors such as pension funds and insurance companies. The debate therefore centres on whether foregone tax revenue could be offset by higher issuance, trading volumes and, ultimately, stronger economic growth.

Implications for liquidity, valuations and investor strategy

For investors, the direction of the capital gains tax debate matters on several fronts. A permanent exemption on listed securities would increase after-tax returns and may encourage more active trading, improving price discovery and narrowing bid-ask spreads. Higher turnover typically supports valuations over time, as it signals stronger market participation and confidence. Moreover, tax-exempt gains could make Ghana’s equities and local-currency bonds more attractive to regional asset managers benchmarking African markets, especially in an environment of tighter global financial conditions.

Domestic pension funds and collective investment schemes would also feel the impact. With long-term savings vehicles already playing a growing role in Ghana’s market, a permanent exemption could strengthen their performance metrics, making retirement products more appealing to savers. This, in turn, could deepen the pool of local capital available for corporate issuers and infrastructure projects. However, if the government maintains the current regime, investors may continue to tilt towards instruments already enjoying favourable treatment, such as specific government securities or tax-advantaged funds.

The lobbying effort described by The Business & Financial Times indicates that market participants are trying to shape the next phase of Ghana’s tax reform agenda, which has recently focused on broadening the base and improving compliance. Any move towards permanent capital gains relief would likely be framed as part of a package to boost investment and support the private sector, rather than a standalone concession. Investors will therefore watch for signals from the Ministry of Finance and the Ghana Revenue Authority on whether a review of investment-related taxes is formally on the table.

For now, the push for a permanent exemption remains a live market discussion rather than confirmed policy. Investors, issuers and intermediaries should monitor upcoming budget statements and tax policy reviews, as any shift in Ghana’s approach to capital gains tax could quickly influence liquidity, portfolio allocations and relative valuations across the market.

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