Petroleum (Local Content And Local Participation) (Amendment) Regulations, 2021 (L.I 2435)
On February 17, 2022, a new amendment, Petroleum (Local content and local participation) (Amendment) Regulations, 2021 (L.I 2435), came into force by the mandate conferred on the Minister responsible for Energy. The amendment aimed to deepen local content and local participation of indigenous Ghanaian companies and to maximize Technology Transfer to the indigenous Ghana company. In the amendment, the Commissioner may direct for;
a) An indigenous Ghanaian company to enter into a channel partnership or a strategic alliance arrangement with a non-indigenous Ghanaian company, or
b) A non-indigenous Ghanaian company to enter into a channel partnership or a strategic alliance arrangement with the indigenous Ghanaian company for the supply of goods and services.
The amended regulations also provided for some definitions which outline other categories of services and partnership or Joint Venture to engage in the upstream petroleum industry. The amended regulation defines the following;
a) Channel Partnership
b) Indigenous Ghanaian Company
c) Original Equipment Manufacturer
d) Strategic Alliance
e) System Integrator
f) Value Added Reseller
The supply of goods and services, and commodity chemicals are reserved for Indigenous Ghanaian Companies under the first schedule of part 3 & 4 of the amended regulations.
Key Points
1. Where a non-indigenous Ghanaian company intends to engage in the supply of goods and services within the petroleum industry, the incorporation of a Joint Venture company with the indigenous Ghanaian company with at least (10%) equity participation alone as provided for in the regulations prior to the amendment may not be sufficient to entitle the indigenous Ghanaian company to operate in the petroleum industry.
2. The Commissioner may direct for the formation of a Channel Partnership or Strategic Alliance arrangement between an indigenous Ghanaian company and a non–indigenous Ghanaian Company to engage in the business of petroleum activities. The formation of the Channel Partnership or the Strategic Alliance is aimed at deepening the involvement of indigenous Ghanaian companies, where the responsibilities of each partner is clearly defined and the partners agree to share resources to undertake mutually beneficial projects.
3. The supply of services, goods and commodities is now reserved for Indigenous Ghanaian companies
Ghana Investment Promotion Centre (GIPC)
The Ghana Investment Promotion Centre (GIPC) is the mandated vehicle for investment promotion in the Country. It also oversees, with the Technology Transfer Regulations, and the implementation of the Technology Transfer Agreement (TTA). Before registering with GIPC, an Enterprise is required to register or incorporate under the Companies Act 2019, Act 992 as well as other regulatory mandates that may apply to that enterprise. Under the GIPC Act, 2013, Act 865, all companies/businesses with foreign participation are required to register with the Centre. A non-citizen’s full ownership of an enterprise attracts a minimum capital investment of USD500,000, whereas a joint partnership with a citizen will attract a minimum foreign capital of USD200,000 provided the citizen’s participation is capped at 10% or more. For both, the capital requirement can be either in cash and/or capital goods. Portfolio investments or enterprises engaged solely in export trading* and manufacturing are exempted from meeting the minimum capital requirements
Technology Transfer Agreement (TTA)
Under the Ghana Investment Promotion Centre (GIPC) legislation, a Technology Transfer Agreement (TTA) refers to a legally binding contract/agreement between a transferee (a company in Ghana) and a transferor (the one who owns the copyright or patent) for a duration of 18 months to 10 years for the initial registration and 18 months to 5 years upon its renewal
The Agreement involves;
- Provision of managerial services and personnel training.
- Provision of technical expertise
- Provision of know-how (information, data whether patentable or not including technical/commercial information relating to research, design, use or sale)
- Assignment, sale and licensing of all forms of industrial property (e.g., Patents, Trademark and industrial design).
The TTA is governed by the GIPC Act, 2013, Act 865 (Section 37) and the Technology Transfer Regulations, 1992 (L.I 1547). The GIPC reviews, registers, monitors and controls the clauses within the TTA.
Benefits
- Legal transfer of fees, profits, dividends and charges outside Ghana
- Tax deductibility of transferred fees as expenses for the purpose of Corporate Income Tax
- Non-applicability of offences and penalties
Bank Of Ghana (BOG) Directives
BoG has instructed all commercial banks in the country to demand the GIPC Technology Transfer Agreement (TTA) in a bid to check illicit financial flows from all multinational/transnational companies operating in the country before the funds can be remitted outside
“Local content is the cornerstone of any successful economy. It is the foundation on which businesses can build, innovate and grow, and the bridge between local talent and global markets.”
Ngozi Okonjo-Iweala
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Upcoming Deadlines
| Paye As You Earn (PAYE), March – GRA | 15th April, 2023 |
| Withholding Tax, March – GRA | 15th April, 2023 |
| Value Added Tax, March – GRA | 30th April, 2023 |
| Income Tax Self Assessment Return – GRA | 30th April, 2023 |
| Annual Returns – Office of the Registrar of Companies | 30th April, 2023 |
| Employers’ Annual PAYE Return – GRA | 30th April, 2023 |