Taxes in Ghana

If you are an established business operating in Ghana, one of your key obligations is to pay your taxes. Calculating taxes can be tedious, even more so if you are not sure about the rates and percentages. But the big deal here is that you still have to pay them. Hence, you should know the various taxes to pay and the rates.

This article details everything you need to know about tax registration, tax rates, tax incentives, withholding taxes, income taxes, monthly tax filings, and audits in Ghana. Learn more from these guidelines that will help you comply with all tax requirements in Ghana.

Tax registration

1. All businesses are required to register with the Ghana Revenue Authority (GRA).
2. Businesses exempted from corporate tax are still required to register their business with the GRA to pay income tax.
3. All businesses registering with the GRA, must do so at the nearest GRA district office closest to the project location.
4. To register your company with the GRA, the following documents are required;

• Completed corporate tax registration forms
• VAT registration forms (If Applicable)
• Resume of all directors of the company
• Pictorial delineation of the project/office location

1. A provisional tax assessment is raised on all businesses yearly, including new business registrations.
2. For new business tax registration, provisional tax assessment is determined by the GRA office in consideration of the objects of the business, stated capital and the nationality of the shareholders.
3. All companies liable for tax in Ghana are required to pay provisional tax quarterly.

Tax Rates and Incentives

Annual income tax rates (Effective January 2022) – Find below

Monthly income tax rates (Effective January 2022) – Find below

1. Reliefs in the fifth Schedule have been revised as follows:

A relief is an allowance given to a resident individual to reduce his or her tax burden.

1. The general Corporate Income Tax rate is 25%. However, contemporary rates are depending on the nature of business carried out by an entity, the location of the business and the specific industry in which it operates.

Tax filings

All companies are required to file their monthly and annual tax returns.

• VAT – 30th of the month
• Income tax (PAYE) – 15th of the month
• Withholding tax – 15th of the month
• Annual audited financial statement – not later than 30th  April of the year.

Penalty for late filing of tax returns are

• VAT – After the last working day, you will pay Ghc500. Any additional day is Gh₵10.
• Withholding tax – After 15th you pay Gh₵500. Any additional day is Gh₵10
• Income tax – After each quarter (March, June, September, December), you pay Gh₵500. Any additional day is Gh₵ 10.
• Annual financial statements – After the last working day of April, you will pay Gh₵500. Any additional day is Gh₵10.

Tax audits

From time to time, the GRA may initiate a company audit. In that audit, the company will have to supply the following relevant company source documents;

• VAT invoice books
• Copies of VAT monthly filings
• Bank statements
• PAYE receipts
• Cashbook
• Sales books
• Copies of payment receipts for general and operational expenses
• Custom import documents as evidence for importation
• Asset register
• Trial balance

During an audit, the tax officers typically assess whether the source documents agree with the audited financial statement that has been submitted to the GRA. Specifically;

• VAT invoices must agree with the Monthly VAT filings
• Monthly VAT filings must agree with the reported Annual turnover figure in the financial statement
• The annual turnover figure must correspond with the company’s sales book and bank statement sales deposits.
• The expenses in the Profit and Loss statement must be traced to the cash book, with supported payment receipts accordingly
• The salaries and wages figure in the Profit and Loss tally with the PAYE filings
• All acquisitions of new assets must be evidenced by appropriate receipts and the asset register, and shown in the balance sheet as well.

Withholding taxes in Ghana

1. The following incomes are subject to withholding tax at the rates specified in the table below;

Excise tax stamp

The Excise Tax Stamp is a specially designed stamp with digital and other security features which is affixed on excisable goods to show that taxes and duties have been paid or would be paid. The stamp is affixed on specified excisable goods in Ghana whether locally manufactured or imported.

Products that Attract Excise Tax Stamp

• Cigarettes and other tobacco products;
• Alcoholic beverages bottled, canned, contained in kegs for sale or packaged in any other form;
• Non-alcoholic carbonated beverages bottled, canned or packaged in any other form.
• Bottled Water etc.
• Any other excisable product prescribed by the Finance Minister.

VAT

Illustration (Calculating VAT)

Value of Taxable Supplies     =    Ghc 12,000

NHIL   =  Ghc 12,000 * 2.5% =   Ghc   300

GETFL = Ghc 12,000 * 2.5% =   Ghc   300

COVID-19 LEVY = Ghc 12,000 * 1% = Ghc 120

Subtotal                               Ghc   12,720.00

VAT = Ghc 12,720 * 15%   =   Ghc 1,908.00

Total Amount  to be paid to GRA = NHIL + GETFL + VAT

= Ghc (300 + 300 + 120+ 1,908)

= Ghc 2,628.00