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%

 

 

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.