External Companies are companies that are incorporated outside of Ghana with a registered place of business in Ghana. They are regulated by the laws of the country in which they were originally incorporated. External companies may be established in a country (outside its country of incorporation) for purposes of facilitating the business interest of its parent company. The reasons for the establishment of such liaison and representative offices or external companies may range from proximity to customers to providing customer support, market research, feasibility studies, and assessing investment opportunities for investment decisions. It gives the foreign company minimal exposure and risk as far as investment capital requirement and corporate taxes are concerned. For example, the GIPC Act 865, 2013 exempts all external companies, liaison and representative offices from any minimum investment capital requirement whereas 100% foreign owned Limited Liability Companies are required to invest a minimum capital of $500,000 in Ghana.
Requirements for Registering an External company, liaison or representative office
Section 303 of the Company Act 1963 (Act 179), mandates the registration of all External Companies with the Registrar General’s Department before the commencement of operations in Ghana.
The following are the key requirements for registering an external company, liaison or representative office in Ghana according to the Company Act 1963, of Ghana.
- A certified copy of the charter, statutes, regulations, memoranda, and articles or other instruments consulting or defining the constitution of the company in a language acceptable (English) to the Registrar.
- A statement in duplicate in the prescribed form giving the following particulars regarding the company;
- It’s name
- The nature of its business(es) or other main objects
- The present forename(s) and surname, and the address of someone, in this code referred to as the local manager, authorized to manage the business in Ghana.
- If the company (parent company) has shares, the authorized shares, issued shares, the amount paid up thereon and the amount remaining payable thereon, distinguishing between the amounts paid and payable in cash and the amount paid and payable otherwise than in cash.
- The address of its registered or principal office in the country of its incorporation.
- The address of its principal place of business in Ghana and the number of its post office box as well as contact numbers.
- The name and address in Ghana of a person in this code referred to as a process agent, authorized by the company to accept service of process and other documents on its behalf.
- Such particulars and copies of any charges on the property of the company as are required to be delivered for registration in accordance with section 310 of this code, or, if there are no such charges, a statement in the prescribed form to that effect.
What is the cost of registering an External company, Liaison or Representative Office?
The total statutory cost for registering an external company in Ghana is $1,200. This fee is payable directly to the Registrar General’s Department either in dollars or cedi equivalent.
Procedures for registering an External company, Liaison or Representative Office at the Registrar General Dept.
Applicants may purchase a set of registration forms, form 20 & 21 from RGD at GH₵9.50. Also, all business registration forms can be downloaded at http://rgd.gov.gh/index.php/forms/
Steps that applicants must undertake include the following;
· Step 1- Company Name Search
A business name, also known as a trading name, is simply a name or title under which a person, or other legal entity trades. Your business name not only identifies you to your customers but also allows you to differentiate yourself from your competitors and enables your customers to make an emotional connection to your business and brand.
The RGD portal offers all users the ability to perform an online business/company name searches to ensure the suitability of the proposed name in Ghana before you can proceed with the business registration.
NB; Applicants should note that the final decision on the use and suitability of business and company names rests with the Registrar-General alone.
The RGD may reject names which in its opinion are too similar to existing names, misleading, offensive, and undesirable or violates existing trademarks. It is advisable to submit alternate company names. Be creative with the company names in order to avoid them being all deemed too similar to existing company names or trademarks by the RGD.
· Steps 2- Taxpayer Identification Number
Obtain Taxpayer Identification Number for all participants. In Ghana, all participants (members/shareholder, company secretary, director, auditor, council members, processing agents, local managers, partners, sole proprietors, of any business entity are first required to obtain a Taxpayer Identification Number (TIN) by registering with the Ghana Revenue Authority (GRA). It typically takes 1-3days to complete this process and it is free to apply. You are required to submit one of the following forms of identification in addition to your application form.
- Bio- data page of passport
- National Identity Card.
- Voter’s Identification Card.
Information required to complete an individual TIN form include;
- Name of applicant
- Photo ID details
- Mother’s maiden name
- Residential and postal
- Contact of applicant
· STEPS 3- Complete External Company Form 20
Information required to complete form 20.
- Name of Company
- Nature of business
- Principal Activity of the Company
- Business Activity Information
- Address of the principal place of business
- Postal Address
- Particulars of local Manager
- Particulars of the person authorized to accept service of process and other documents on behalf of the company.
- Capital Amount (of the parent company)
- Residential address of Manager
- TIN of the Manager.
· STEPS 4 – Complete Form 21 (External Company requiring registration statement that there are no charges on property)
If there are no charges on the property of the company, applicants are required to complete form 21 and write a statement to that effect.
· STEPS 5 – Submission of registration forms
After completing the forms, an applicant should submit the forms at the office of the Registrar General’s Department with an official fee (in cash) of $1,200. It takes between 2 -3 weeks for the registration process to be completed and certificates registration and the company’s profile issued accordingly.
Taxes for External Company, Liaison or Representative Office in Ghana
All External companies except those under The Ghana Free Zones Board are within the tax net of the central government. Below are some of the taxes companies are mandated to pay.
Companies operating in Ghana in Ghana are taxed on their worldwide income, taxes are only applied to foreign income that is received in or brought into Ghana. Non-resident companies are taxed on their locally generated income only. The rate of corporation tax is 25%.
Value Added Tax (Vat)
VAT is charged on the supply of goods and services in Ghana and imported goods and the supply of imported services at a rate of 15%.
Individual Income Taxes/ Pay As You Earn (PAYE)
Currently, the rate of capital gains tax on the disposal of a chargeable asset amounting to a gain of over GH ¢50 is 15%. Dividends are taxed at 8%.
In Ghana, a tax is deducted from an employee’s personal income at source through a ‘pay-as-you-earn’ scheme. The highest income tax rate payable by an individual resident in Ghana is 25%.
It is the employer’s responsibility to file monthly tax returns on behalf of its employees. The employer is required to withhold the employee’s taxes and pay to the Ghana Revenue Authority. The tax withheld must be filed and payment made by the 15th of the month following the month in which the tax was withheld.
Additionally, the employer shall, not later than 30 April following the end of every year of assessment, furnish a return with respect to each person employed by the employer who derives assessable income for the year from the employment. The return is required to outline salaries paid to each employee, exemptions, tax reliefs, chargeable income, tax due and tax paid.
Registering an external company, liaison or representative office in Ghana is not a difficult process. There are forms to be completed with relevant information, payment made at the RGD and then documents will be processed within 2 to 3 weeks of submission.
We hope you found the guidelines useful.