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
  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

  1. In Ghana the applicable taxes are;
  2. Corporate tax – 25%
  3. Capital gains tax -15%
  4. Dividend tax – 25%

 

  1. 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%

 

  1. 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%

 

  1. 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

 

  1. 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

  1. 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.
  1. 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

  1. The GRA may from time to time initiate a company audit.
  2. 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

 

  1. 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;

 

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%

 

2020-02-05T09:30:39+00:00October 2nd, 2019|Compliance|

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7 Comments

  1. Peter Amponsah January 11, 2019 at 12:31 pm - Reply

    which type of tax rate is appropriate for manufacturing, retailing and wholeselling companies in ghana

  2. nana yaw adjei boafo April 5, 2019 at 1:09 pm - Reply

    keep updating us on current tax issues pending in the country

  3. Mojoyinola Odebiyi April 9, 2019 at 1:35 pm - Reply

    This is good. Taxes in Ghana at a glance, but obsolete. Kindly update.

  4. Segun October 23, 2019 at 10:34 am - Reply

    Are there any tax credit for Solar and are there any tax holidays for investments of over 30 million dollars

  5. Robert Appiah October 31, 2019 at 2:53 pm - Reply

    Kindly update the monthly and annual income tax rates and the VAT and NHIL as well. Thanks

  6. NATHANIEL ALUG-BAEK November 18, 2019 at 4:11 pm - Reply

    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.

  7. Narh-Paddie Willam December 20, 2019 at 4:11 pm - Reply

    What is the procedure for compulsory registration of a permanent establishment business in Ghana?

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