Important Guidelines for Tax Compliance in Ghana

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

1. All businesses are required to register with the Ghana Revenue Authority (GRA).
2. 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.
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
• Resume of all directors of the company
• Pictorial delineation of the project/office location

5. A provisional tax assessment is raised on all businesses yearly, including new business registrations.
6. 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.
7. All companies liable for tax in Ghana, are required to pay provisional tax quarterly.

Tax Rates and Incentives

8. In Ghana the applicable taxes are;
9. Corporate tax – 25%
10. Capital gains tax -15%
11. Dividend tax – 25%

1. Annual income tax rates (Effective January 2020) – Find below

1. Monthly income tax rates (Effective January 2020) – Find below

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

10. The following tax incentives (tax holidays and tax rebates) are available under the law;

Tax filings

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

• VAT – 30^th of the month
• Income tax (PAYE) – 15^th of the month
• Withholding tax – 15^th of the month
• Annual audited financial statement – not late than 31^st May of the year.

12. 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 15^th 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

13. The GRA may from time to time initiate a company audit.
14. 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

15. 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

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

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

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.