Ghana’s 20% excise tax on sweetened beverages threatens manufacturers – AGI warns 

GHANA – More than a year and a half into the implementation of the Excise Duty (Amendment) Act 2023 (Act 1093), which imposes a 20% tax on sweetened and fruit beverages, manufacturers are struggling to survive, according to the Association of Ghana Industries (AGI). 

The tax, which took effect in July 2023, was introduced as part of measures to meet conditions for an International Monetary Fund (IMF) bailout.  

However, the AGI argues that instead of generating revenue, the tax has pushed several domestic producers to the brink of collapse. 

Many manufacturers have resorted to cost-cutting measures, including downsizing, employee layoffs, and relocating operations to neighboring countries with more favorable tax regimes. As a result, the AGI claims that the government has lost more revenue than it has gained from the tax. 

“Closure or capacity reduction of industry-related manufacturing and trading companies has led to a decline in duties and levies, PAYE, withholding taxes, corporate income tax, VAT, and related taxes,” said AGI’s Chief Executive Officer, Seth Twum-Akwaboah. 

He added that the downturn in the allied informal sector has further affected self-employed individuals and the broader employable population, compounding the economic impact. 

Before the introduction of the 20% excise duty, the AGI had warned that the tax regime was excessive, punitive, and counterproductive to the country’s industrial ambitions.  

It estimates that taxes alone—both pre-production and post-production—account for over 50% of production costs for beverage manufacturers in Ghana. 

This, the AGI noted, contradicts the government’s vision of positioning Ghana as an industrial hub under the African Continental Free Trade Area (AfCFTA). Instead of fostering growth, the tax has worsened investment conditions for local producers. 

“Manufacturers were already struggling under multiple taxes, which had led to declining sales. Instead of reducing these burdens, the then-government increased them despite worsening investment conditions,” Twum-Akwaboah said. 

A fruit juice manufacturer disclosed to B&FT Online that it had reduced its production capacity from 85% to 38% due to the tax’s impact.  

The company reported that its products have become uncompetitive against imported alternatives from markets with more favorable tax regimes. 

“Sales have dropped by more than half since the tax was introduced. Hundreds of workers have been laid off. Before the excise duty, production utilization was around 85%, but now it has fallen to an average of 38%,” a company representative said. 

According to the AGI, this underutilized capacity should be a major concern for the state, as it translates into missed revenue and employment opportunities. 

“It is our sincere hope that the onerous Excise Duty (Amendment) Act 2023 (Act 1093) will be reversed in the next budget, as its adverse effects are severely impacting the industry,” Twum-Akwaboah concluded. 

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