Taxes in Ghana
If you are an established business operating in Ghana, one of your key obligations is that you have to pay your taxes. Calculating taxes can be tedious and 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. Because of this, it’s better for you to know the various taxes to pay and the rates.
In this article, we have detailed 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 which will help you comply with all tax requirements in Ghana.
Tax registration
- All businesses are required to register with the Ghana Revenue Authority (GRA).
- Businesses which are exempt from corporate tax are still required to register their business with the GRA for the purposes of payment of income tax.
- All businesses registering with the GRA, must do so at the nearest GRA district office closest to the project location.
- To register your company with the GRA, the following documents are required;
- Completed corporate tax registration forms
- VAT registration forms
- Resume of all directors of the company
- Pictorial delineation of the project/office location
- A provisional tax assessment is raised on all businesses yearly, including new business registrations.
- 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.
- All companies liable for tax in Ghana, are required to pay provisional tax quarterly.
Tax Rates and Incentives
- In Ghana the applicable taxes are;
- Corporate tax – 25%
- Capital gains tax -15%
- Dividend tax – 25%
- Annual income tax rates (Effective January 2020) – Find below
| Chargeable Income (GH¢) | Rate (%) | Tax (GH¢) | Cumulative Chargeable Income (GH¢) | Cumulative Tax (GH¢) |
| First 3,828 | Free | NIL | 3,828.00 | NIL |
| Next 1,200 | 5 | 60.00 | 5,028.00 | 60.00 |
| Next 1,440 | 10 | 144.00 | 6,468.00 | 204.00 |
| Next 36,000 | 17.5 | 6,300.00 | 42,468.00 | 6,504.00 |
| Next 197,532 | 25% | 49,383.00 | 240,000.00 | 55,887.00 |
| Exceeding 240,000 | 30% |
- Monthly income tax rates (Effective January 2020) – Find below
| Chargeable Income (GH¢) | Rate (%) | Tax (GH¢) | Cumulative Chargeable Income (GH¢) | Cumulative Tax (GH¢) |
| First 319 | NIL | NIL | 319.00 | NIL |
| Next 100 | 5 | 5.00 | 419.00 | 5.00 |
| Next 120 | 10 | 12.00 | 539.00 | 17.00 |
| Next 3,000 | 17.5 | 525.00 | 3,539.00 | 542.00 |
| Next 16,461 | 25% | 4,115.25 | 20,000.00 | 4,657.25 |
| Exceeding 3,240 | 30% |
- Reliefs in the fifth Schedule have been revised as follows:
| Type Of Reliefs | Pervious Relief GH₵ | Current Relief GH₵ |
| Marriage / Responsibility | 200 | 1,200 per Year |
| Old Age (Granted persons age 60 years and above) | 200 | 1,500 per Year |
| Child Education (Granted for a maximum of 3 children enrolled in recognized registered educational institutions in the country). | 200 | 600 per Child per Year |
| Aged Dependant Relative (Granted for up to two (2) dependant relatives of 60 years or more. | 100 | 1,000 per Year |
| Professional Training Relief | 400 | 2,000 per Year |
- The following tax incentives (tax holidays and tax rebates) are available under the law;
| Tax Rates | Percentage (%) |
| General Corporate Tax | 25% |
| Companies Listed on the GSE | 22% |
| Free Zone Enterprises | 8% (After 10 year Tax Holiday) |
| Manufacturing Companies | 25% |
| Companies Engaged in Non-Traditional Exports | 8% |
| Companies Producing Cocoa By-Products | 25% |
| Agro-Processing Companies | 25% (after 1% for the 1St 5 years) |
| Venture Capital Financing Company | 25% (after 1% for the 1St 10 years) |
| Unit Trust Scheme and Mutual Fund | 25% (after 1% for the 1St 10 years) |
| Waste Processing | 25% (after 1% for the 1St 10 years) |
| Companies Engaged in Non-Traditional Exports | 8% |
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 late than 31st May 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 last working day of April you will pay Gh₵500. Any additional day is Gh₵10.
Tax audits
- The GRA may from time to time initiate a company audit.
- In an audit, the company will be required to supply relevant company source documents including the following;
- VAT invoice books
- Copy of VAT monthly filings
- Bank statement
- 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 assesses 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
- The following incomes are subject to withholding tax at the rates specified in the table below;
| Payments to Residents | ||
| (a) General | Rate | Status |
| (i) Dividend, including capitalisation of profits | 8% | Final |
| (ii)Dividend paid to persons from petroleum operations | 8% | Final |
| (iii) Dividend paid to persons from mineral operations | 8% | Final |
| (iv) Interest | 8% | On Account |
| (v)Royalties and Resource payment | 15% | On Account |
| (vi) Rent on properties (Payment to an individual)
Business income – Residential – Non-Residential |
8% 15% |
On Account On Account |
| (vii) Rent on properties (Payment to an individual)
Non-Business income – Residential – Non-Residential |
8% 15% |
Final Final |
| (viii) Rent on properties (Payment to persons other than an individual)
Business income – Residential – Non-Residential
Non-Business income – Residential -Non-Residential |
8% 15%
8% 15% |
On Account On Account
Final Final |
| (ix) Tax on petroleum subcontractors | 7.5% | On Account |
| (x) Payments made to a person who conducts a relevant transport business other than as a result of transshipment | 15% | On Account |
| (xi) Payments made to a person who conducts a relevant transport business other than as a result of transshipment | 15% | On Account |
| (xii) Payments for unprocessed precious minerals located or won in Ghana | 3% | On Account |
| (xiii) Payments due to persons who conduct business of transmitting or receiving messages by cable, radio, optical fiber or satellite or electronic communication | 15% | On Account |
| (xiv) Commission paid to an individual as a sales agent | 10% | On Account |
| xv) Service fees paid to an individual for examining, invigilating or supervising an examination, or part time teaching or lecturing | 10% | On Account |
| (xvi) Fees or allowances, to a resident director, manager trustee or board member of a company or trust | 20% | On Account |
| (xvii) Commission paid to an individual as a resident insurance, sales or canvassing agent | 10% | On Account |
| (xviii) Endorsement fees to an individual | 10% | Final |
| (xix) Any other service provided by an individual | 7.5% | On Account |
| xx) Commission to an individual as a resident lotto receiver or agent | 10% | On Account |
| xxi) Contract payments for the supply or use of goods | 3% | On Account |
| (xxii) Contract payments for the supply of works | 5% | On Account |
| (xxiii) Contract payments for the supply of services
( Refer to item (ix) for rates applicable to petroleum subcontractors) |
7.5% | On Account |
| (xxiv) Contract payments made to a Withholding VAT agent in respect of taxable output value of standard rated supplies | 7% | On Account |
| Payments to Non-Residents | ||
| (a) General | Rate | Status |
| (i) Interest | 8% | Final |
| (ii) Dividend | 8% | Final |
| (iii) Royalties and Natural Resource Payment | 15% | Final |
| (iv) Rent on properties
– Residential – Non-Residential |
8% 15% |
Final Final |
| (v) Management and technical service fees | 20% | Final |
| (vi) Contract payments for the supply of any services | 20% | Final |
| vii) An insurance premium with a source in Ghana | 5% | Final |
| (ix) Goods, Works and Service fee which give rise to income with a source in Ghana | 20% | Final |
| x) Tax on petroleum subcontractors | 15% | Final |
| Payments for unprocessed precious minerals located or won in Ghana | 3% | Final |
| Payments received by a person who conducts a relevant transport business other than as a result of transshipment | 15% | Final |
| (xiii) Rental of containers and related equipment which are supplementary or incidental to the relevant transport business above | 15% | Final |
| Payments received by a person who conducts a business of transmitting or receiving messages by cable, radio, optical fiber or satellite or electronic communication | 15% | Final |
| Earned repatriated profits by a non-resident who carries on business in Ghana through a permanent establishment | 8% | Final |
Excise tax stamp
Excise tax stamps are to be affixed to specific excisable goods which are manufactured in or imported into the country. They apply to tobacco products, alcoholic and non-alcoholic carbonated beverages, bottled water and other goods specified by the minister responsible for finance, before sale or before entry into the market.
VAT
| Value Added Tax | ||
| Taxable Supplies | Standard Rate | 12.5% |
| Taxable Supplies | Exports | 0% |
| Taxable Supplies | Retailers and Wholesalers | 3% |
| National Health Insurance Levy | ||
| Taxable Supplies | Standard Rate | 2.5% |
| Ghana Education Trust Fund Levy | ||
| Taxable Supplies | Standard Rate | 2.5% |
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
Subtotal Ghc 12,600.00
VAT = Ghc 12,600 * 12.5% = Ghc 1,575.00
Total Amount to be paid to GRA = NHIL + GETFL + VAT
= Ghc (300 + 300 + 1,575)
= Ghc 2,175.00
Cargo Tracking Note
It is mandatory for all shipments to Ghana to have a cargo tracking note number, without which cargo cannot be cleared at destination. Cargo tracking note is an official loading certificate number which confirms detailed information about cargo and its movement between ports. Being a mandatory regime, every shipment must be covered by a CTN number before the cargo arrives at the destination port.
Businesses should consult experts whenever they have trouble interpreting the tax laws and important tax compliance issues in Ghana. Complying with the tax laws stated, would help a business to thrive in the Ghanaian business environment and avoid future troubles.
which type of tax rate is appropriate for manufacturing, retailing and wholeselling companies in ghana
keep updating us on current tax issues pending in the country
This is good. Taxes in Ghana at a glance, but obsolete. Kindly update.
Are there any tax credit for Solar and are there any tax holidays for investments of over 30 million dollars
Kindly update the monthly and annual income tax rates and the VAT and NHIL as well. Thanks
WELL NOTED.
BUT WHY SHOULD I PAY PAYE FOR WAGES?
BECAUSE, THE LABOURERS I WILL ENGAGE THIS WEEK ARE NOT THE SAME LABOURERS I WILL ENGAGE NEXT WEEK.
What is the procedure for compulsory registration of a permanent establishment business in Ghana?