Economy

    Government scraps 20% excise duty on local fruit juice

    The move aims to boost agro-processing and create jobs within Ghana's domestic industry.

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    The Ghanaian government will abolish the 20% excise duty on locally manufactured fruit juices. This significant policy change aims to support agro-processing, create jobs, and strengthen domestic industry. The Finance Minister, Dr. Cassiel Ato Forson, announced this measure during the 2026 Mid-Year Budget Review in Parliament on Thursday, July 23. The decision forms part of broader tax reforms under the proposed Excise Duty Bill. This bill seeks to improve tax administration, close revenue leakages, and promote local production. The 20% excise duty on locally manufactured fruit juices was initially introduced in 2023. Its removal is expected to make local fruit juice products more competitive against imported alternatives. This initiative fits into Ghana's broader economic strategy to encourage value addition in the agricultural sector. The government has consistently emphasized the need to process raw materials locally to generate higher income and employment. Reducing the tax burden on local manufacturers directly supports this long-term economic objective. It also aligns with efforts to diversify the economy beyond primary commodity exports. Finance Minister Dr. Cassiel Ato Forson stated that the government would "abolish the payment of 20 percent excise duty on locally manufactured fruit juices introduced in 2023." He explained that this decision intends "to support agro-processing and job creation." This direct support for local businesses is a key component of the government's industrialization agenda. Beyond the fruit juice tax relief, the Finance Minister identified major weaknesses in the country's excise tax system, particularly concerning wines and spirits. An analysis of imports between 2023 and 2025 revealed a substantial revenue loss. Wines and spirits with a taxable value exceeding GHS 5 billion entered Ghana during this period. However, approximately 78% of this value bypassed excise duty through customs procedures like warehousing and free zones. Dr. Forson noted, "Almost four out of every five cedis of the potential excise tax base on wine and spirits escaped the tax net." This inefficiency is neither sustainable nor equitable. To address this issue, the Excise Duty Bill proposes a hybrid tax system for wines and spirits. This new system will combine value-based and quantity-based taxation. The goal is to reduce undervaluation and misclassification, ensuring a more effective collection of excise duties. This reform could significantly increase government revenue from this sector. It will also create a fairer playing field for businesses that comply with tax regulations. Stakeholders in the agro-processing sector will closely monitor the implementation of the abolished excise duty. The impact on local fruit juice production volumes and job creation will be a key indicator of the policy's success. Furthermore, the effectiveness of the new hybrid tax system for wines and spirits will be crucial for improving overall tax administration and revenue generation. These reforms are vital for Ghana's fiscal health and economic development.

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