The Ghana Investment Promotion Centre Bill, 2025 (the “Bill”) has been passed by Parliament and is awaiting Presidential assent. When enacted, it will repeal the Ghana Investment Promotion Centre Act, 2013 (Act 865) and introduce a substantially revised investment regulatory framework.

Much of the Bill preserves familiar investment protection architecture. However, one provision stands apart in its significance for the taxation of multinational and intra-group arrangements: the proposed treatment of Technology Transfer Agreements (“TTAs”). The critical change is not the introduction of new registration requirements for TTAs, registration has always been required under Ghanaian law. The critical change is what non-registration now means.

Under Clause 51(12) of the Bill, fees arising under an unregistered TTA shall not be treated as deductible expenses for purposes of the Income Tax Act, 2015 (Act 896). This single provision transforms what has historically been a regulatory compliance matter into a cascading set of tax, transfer pricing, accounting and cash flow consequences. This bulletin identifies and explains each of those consequences.

1. Registration as a Tax Gateway Under Clause 51(12)

TTA registration becomes a prerequisite to deductibility. This represents a structural shift in how deductibility is determined in Ghana’s tax system. Traditionally, deductibility under Act 896 has been determined by reference to the nature of the expenditure and its connection with the production of income. The Bill adds an additional and separate condition i.e. a payment may satisfy every requirement of Act 896 and still be denied as a deduction if the underlying TTA is unregistered.

Two important qualifications must be noted:

• Registration does not guarantee deductibility. It merely removes a statutory prohibition, but the taxpayer must still satisfy the substantive provisions of Act 896 and, where applicable, the arm’s length standard under the Transfer Pricing Regulations, 2020 (L.I. 2412).
• The banking restriction in Clause 51(11) means that banks may not process TTA payments unless registration requirements are satisfied. Non-deductibility and non-remittance risk therefore run in parallel.

2. The TTA Cap versus Arm’s Length Pricing Tension

The Bill preserves the Technology Transfer Regulations, 1992, which cap royalties at 6% of net sales, technical service fees at 5% of net sales and management fees at 2% of profit before tax (unless higher amounts are specifically approved).

The Transfer Pricing Regulations require related-party transactions to be priced at arm’s length. Where a transfer pricing analysis supports a royalty rate that exceeds the TTA cap, a direct and unresolved conflict emerges.

Consider the following scenario:

A taxpayer’s transfer pricing documentation demonstrates that an arm’s length royalty is 9% of net sales. The registered TTA recognises only 6%. The Bill does not address whether the excess 3% remains deductible.

One view is that only the registered amount qualifies. Another is that the arm’s length amount should remain deductible as a matter of income measurement under Act 896. The Bill offers no answer.

For taxpayers operating in IP-intensive or technology-driven sectors including mining services, fintech and telecommunications, this ambiguity is not abstract. It creates a genuine risk that payments grounded in transfer pricing analysis may nonetheless be partially or wholly denied as deductions.

3. Long Outstanding Payables and Transfer Pricing Exposure

Where registration is delayed, denied or under review, the banking restriction in Clause 51(11) prevents settlement of the TTA liability. In practice, the obligation accumulates on the taxpayer’s balance sheet as a long-outstanding payable to a foreign related party.

This gives rise to a transfer pricing problem under Regulation 9 of L.I. 2412, which permits the Commissioner-General to impute an arm’s length financing charge where trade payables remain outstanding for more than twelve months without an appropriate financing element.

The result is a potential circularity:

• The taxpayer cannot make payment because of the TTA registration restriction.
• The resulting outstanding balance may attract transfer pricing scrutiny as an interest-free financing arrangement.
• The legislation provides no guidance for liabilities that remain unpaid because payment is restricted by law.

Taxpayers with historic or pending TTA-related balances owed to foreign related parties should assess whether those balances are approaching or have exceeded the twelve-month threshold and consider whether appropriate interest provisions are required.

4. The Accrual and Withholding Tax Mismatch

Sections 21 and 22 of Act 896 require liabilities to be recognised when the events giving rise to the obligation occur and economic performance has taken place. A royalty or management fee that has been earned and become payable is accordingly recognised in the period of accrual, regardless of when payment is made.

Under the Bill, the accrued amount may be denied as a deduction because the TTA is unregistered. But the withholding tax regime operates independently of the deductibility provisions.

The interaction produces a potentially severe outcome:

• Withholding tax is payable on the accrued fee (as income of the foreign recipient).
• No deduction is available for the same payment in the hands of the Ghanaian payer.
• Where the agreement contains a gross-up clause, the economic burden is compounded: the payer bears the royalty cost, the withholding tax and the tax cost of the denied deduction simultaneously.

This outcome, taxed twice, deducted once, or not at all,  is a material and unintended consequence that merits urgent legislative clarification.

5. The Retrospectivity Question

Perhaps the most consequential unanswered question in the Bill is whether subsequent registration of a TTA operates retrospectively. Clause 51 denies deductibility for fees arising under an unregistered TTA, but says nothing about whether registration once obtained validates previously denied deductions or regularises historical accruals and withholding tax positions. The answer determines whether the Bill’s consequences are temporary timing mismatches or permanent tax costs:

Retrospective registration

Denied deductions become available in later periods. Deferred tax assets may be supportable. Historical accruals may eventually align with their tax treatment. The consequences are timing differences, not permanent costs.

Prospective registration only

All deductions denied in pre-registration periods are permanently lost. No curing of historical accruals, withholding tax exposures or transfer pricing positions. The consequences become permanent and potentially very significant.

Until this question is resolved, whether by legislative amendment, subordinate legislation or GRA administrative guidance, taxpayers face a fundamental uncertainty that cannot be managed purely through compliance.

6. Financial Reporting and Deferred Tax Consequences

The Bill’s implications extend into financial reporting. Many multinational groups have historically accrued royalties, management fees and technical service charges in their Ghanaian entities as services have been rendered and contractual liabilities have arisen. The denial of a tax deduction does not extinguish the underlying obligation. The liability continues to be recognised in the financial statements. However, the payer entity may be unable to recognise a corresponding tax benefit.

Depending on the position taken, this divergence between accounting profit and taxable income may produce:

• Deferred tax assets — if subsequent deductibility is considered probable and the position is temporary.
• Permanent differences — if deductibility is considered permanently unavailable.
• Uncertain tax positions (UTPs) under IFRIC 23 — requiring disclosure and, in some cases, recognition of a liability based on the most likely or expected value outcome.
• Increases in effective tax rate — with implications for group tax reporting and shareholder communications.

For groups with material recurring intra-group charges into Ghana the financial reporting consequences of the Bill may be as significant as the cash tax exposure.

Recommended Immediate Actions

Given the significance and immediacy of the risks identified above, we recommend that affected entities undertake the following steps without delay:

• Audit all existing TTAs. Review every royalty, management fee and technical service fee arrangement to confirm whether the underlying agreement is registered, and with what scope and amount.
• Initiate registration for unregistered TTAs. Where a qualifying TTA is unregistered, begin the registration process under the GIPC framework immediately. Do not wait for the Bill to receive Presidential assent.
• Review transfer pricing documentation. Assess whether the arm’s length price for any TTA-related transaction exceeds the applicable Technology Transfer Regulations cap. Where it does, specialist advice should be obtained on how to manage the resulting uncertainty.
• Assess accrued liabilities and payable balances. Identify all TTA-related payables owed to foreign related parties and evaluate whether any have been outstanding for twelve months or more, creating imputed financing exposure under L.I. 2412.
• Evaluate withholding tax exposure. Where accruals have been made on unregistered TTAs, consider the withholding tax position in light of the potential denial of deductibility.
• Engage your auditors. Consider the financial reporting implications, including whether deferred tax assets are supportable, whether UTPs need to be recognised and how the effective tax rate of the Ghanaian entity is affected.