What are Non-Profit/NGOs in Ghana
Non-profit organization secretariats under the Ministry of Gender, Children and Social Protection define a Non-Governmental Organization (NGO) as a “non-governmental legal entity, association, or institution voluntarily established to mobilize and utilize resources for charitable, religious, cultural, educational, social, or communal purposes, or to pursue any other not-for-profit objectives intended for the public good”. Although NGOs exist purposely to promote social welfare and contribute to national development, they nevertheless operate within Ghana’s regulatory and legal framework.
Are Not-For-Profits Taxable?
In Ghana, the Income Tax Act, 2015 (Act 896) as amended, provides the legal basis for the taxation of all persons, with NGOs being no exception. NGOs, because of their non – profit status, are generally exempt from tax, but they sometimes engage in taxable activities such as employment, commercial business, investment income, and the provision of services. As a result, understanding the tax implications of NGO operations is essential to ensure compliance with the Ghana Revenue Authority (GRA) requirements.
This article seeks to provide readers a clear understanding of the tax implications of Non-Governmental Organizations in Ghana, delving into the Legal framework, corporate tax income exemption, employee-related costs, withholding tax, value-added tax, as well as annual filing.
SUMMARY TABLE
| Tax Category | Applicability | Statutory Conditions |
|---|---|---|
| Corporate Income Tax (CIT) on Charitable Activities | Not Applicable | Income derived mainly from approved charitable, religious, educational, or public-benefit activities is exempt under Section 97 of the Income Tax Act, 2015 (Act 896), as amended. |
| Corporate Income Tax (CIT) on Commercial Activities | Applicable | Income derived from commercial activities unrelated to the core objectives of the NGO is taxable in accordance with Sections 97(4) and 97(5) of Act 896. |
| Pay-As-You-Earn
(PAYE) |
Applicable | NGOs are required to pay PAYE on employee salaries regardless of their tax-exempt status, in line with the Income Tax Act, 2015 (Act 896). |
| Pension Contributions (SSNIT and Tier 2) | Applicable | Employer and employee pension contributions of 13% and 5.5% respectively apply to NGOs employing staff under Ghana’s National Pension Act 2008(Act 766). |
| Withholding Tax | Applicable | Withholding tax applies to payments on professional fees, consultancy services, management fees, rent, and contractor payments at their prescribed rates. |
| Value Added Tax (VAT) Registration | Applicable | VAT registration is required where the NGO makes taxable supplies and exceeds the VAT registration threshold of GHS750,000 under the Value Added Tax Act, 2025 (Act 1151). |
| VAT on Non-Taxable or Charitable Activities | Not Applicable | NGOs which do not engage in taxable supplies are not required to charge, file, or pay VAT. |
| Donor Funding and Grants | Not Applicable | Grants and donations received and applied exclusively to the approved charitable objectives of the NGO are exempt from income tax. |
| Church Tithes, Offerings, and Donations | Not Applicable | Tithes, offerings, and donations in cash and kind received by religious institutions are exempt from tax when used for religious or charitable purposes under Section 97 of Act 896. |
| Annual Income Tax Returns | Applicable | NGOs are required to file annual income tax returns within four months after the end of the accounting year. |
| Submission of Audited Financial Statements | Applicable | Annual audited financial statements must be submitted to the Ghana Revenue Authority and the Registrar General Department in compliance with statutory filing requirements. |
Table 1: Taxes for NGOs in Ghana
Registering an NGO in Ghana
LEGAL FRAMEWORK
NGOs, after registering with the Office of the Registrar Companies must register with the Department of Social Welfare. The following documents are submitted to the District Assembly office for registration with Social Welfare:
- Company registration documents acquired from the Registrar General Department
- Application letter on the organization’s official letterhead
- The organization’s constitution
- An NGO profile form
- Memorandum of understanding between the NGO and the Government
- Articles of incorporation from the country of origin (if it is an external company).
- A social investigation report
- A recommended letter from the district, municipal, or metropolitan assembly responsible for the area where your NGO is to be located.
- Brochure or publication about your organization.
- The district office, after inspection and evaluation, writes a report to the national or regional office by submitting 3 copies of an endorsement letter from the Department of Social Welfare.
Registering an NGO with the Ghana Revenue Authority
NGOs must register with the Ghana Revenue Authority as operating for charitable, religious, educational, or public purposes to apply for tax exemption under section 97 of the Income Tax Act (Act 896) as amended.
Income Tax Act (Act 896), section 97(2) states that “the Commissioner- General shall, before approving an entity under subsection (1), ensure that the entity is established to operate as
- Charitable institution that is of a public nature
- A religious institution that is of a public nature
- A body of persons formed for the purpose of promoting social or sporting activities.”
Tax Implications for Not-For-Profits/NGOs in Ghana
Corporate Income Tax on Charitable Activities
Under Income Act 896 section 97(4), income derived from charitable activities is exempt from income tax if the organization is of a public character and its operations are directed toward the public benefit. Examples of such organizations include religious institutions such as churches and mosques, educational institutions designed for public benefit, charitable foundations and non-governmental organizations, social welfare and community development organizations.
Corporate Income Tax on Commercial Activities
In contrast, Income Act Tax (Act 896), Section 97(4 & 5) states that “income accruing to or derived by the charitable organization is exempted from tax, but does not apply to business income of the organization. A non-governmental organization that engages in commercial activities such as disposal of assets, sale of goods, operation of a bookshop, and commercial transport and provision of services unrelated to their core objectives, such income becomes taxable.
If NGOs such as ActionAid Ghana and World Vision Ghana have separate business activities, they must ensure proper accounting and records to allocate exempt and taxable income. The Commissioner-General may require audits or reports to verify that the exempt status is being applied correctly at the end of the accounting period.
Employee-Related Taxes
Although an organization may be tax-exempt, NGOs that employ staff or pay contractors are fully subject to Pay as You Earn and withholding tax. There is no exemption from Pay-As-You-Earn (PAYE) simply because an employer is a non-profit. NGOs must register as employers and deduct PAYE from each employee’s salary every month, remitting these with returns to GRA, contribute Social Security on behalf of the employees, and file annual payroll returns.
Withholding Taxes
NGOs must file for any withholding tax on certain payments, such as to contractors, consultants, rent, and dividends. For example, payments to resident contractors and management fees generally carry a 20% withholding obligation, 3% for goods purchased, 5% for works completed while professional fees and other services provided are 7.5%. The tax withheld must be filed and payment made by the 15th of the month following the month in which the tax was withheld. Failure to do so attracts a penalty.
VAT Registration
Unlike the Corporate Income Tax, the Value Added Tax (VAT) Act does not grant automatic exemption to non-governmental organizations. Under the VAT administrative guidelines for the VAT Act 2025 (Act 1151), section 7.2, any entity making taxable supplies, whether taxable goods or services, above the registration threshold (GH¢750,000 annual turnover) must register for VAT and charge the standard 15% rate.
VAT Filing
Non-governmental organizations engaged in commercial activities such as selling merchandise, providing consulting services, and training are liable for VAT on those sales and can claim VAT on their inputs. On the other hand, non-governmental organizations not involved in taxable activities do not trigger VAT filing and payment to the Ghana revenue authority.
How are Donor funding and Grants treated?
Donations and grants from both local and foreign sources are the main sources of a non-governmental organization’s funding. The GRA’s notice emphasizes that receipts of grants and donations accruing to a charitable organization, such as NGOs are exempt from income tax. Thus, only if the cash gifts and in-kind contributions are used purposely for the NGOs’ mission.
Section 100(1) of Income Tax Act, 2015 (Act 896) as amended states that “Where the income for a year of assessment in respect of a person who has made a donation or contributed to a worthwhile cause is to be ascertained under section 2, the person may claim a deduction that is equal to the contribution and donation made by that person during that year for a worthwhile cause approved by Government under subsection (2)”
In simple terms, corporate and individual donors can claim a tax deduction for donations to approved NGOs that are of a worthwhile cause.
How are church offerings, tithes, and donations treated?
Similarly, church offerings, tithes, and donations in both kind or cash are treated like donor funding and grants as and when certain conditions are met under the Income Tax Act,2015 (Act 896), section 97.
As such, tithes, offerings, freewill contribution and donations in kind or cash received by churches are exempt from tax and likewise are treated as business income.
Annual Filing and Reporting
The Income Tax Act,2015 (Act 896) as amended requires taxpayers (including NGOs) to file their return on income not later than four months after the end of the year. Regardless of whether no tax is due, NGOs must file a nil return or report that all income received was exempted. Failure to make this known to GRA may trigger penalties and interest. NGOs are required to submit their annual audited financial statement to the Ghana Revenue Authority as well as the Registrar General.
Conclusion
In summary, while non-governmental organizations (NGOs), charitable institutions, and religious bodies in Ghana benefit from tax exemptions, they are not entirely exempt from all tax types. The tax law (Income Tax Act, 2015 (Act 896)) elaborates on the difference between income derived from the core objectives, such as charitable or religious, and income generated from commercial activities, such as disposal of assets and sales of goods, with the latter subject to Corporate Income Tax and Value Added Tax (VAT).
Additionally, NGOs are required to comply with employment-related taxes such as PAYE and pension contributions, as well as withholding tax obligations where applicable. VAT registration and compliance are also required when taxable supplies exceed the statutory threshold of GHS 750,000 according to the VAT Act 2025 (Act 1151).
Aside from statutory tax liabilities, NGOs must maintain proper financial reporting accountability through the filing of annual income tax returns and submission of audited financial statements to the Office of Registrar Companies and the Ghana Revenue Authority, respectively. Understanding the tax framework helps NGOs maintain operational transparency, donor trust, and legal compliance.
REFERENCES
- Non-Profit Organizations Secretariat – https://npos.mogcsp.gov.gh/
- VAT Act 2025 (Act 1151) – https://gra.gov.gh/wp-content/uploads/2026/01/VAT-Guidelines-for-VAT-ACT-1151.pdf
- National Pension Act 2008(Act 766) –https://npralive.s3.amazonaws.com/public/documents/NPRA_2008_Act_766.pdf
- Income Tax Act, 2015 (Act 896) as amended
