GUIDELINES FOR TAX COMPLIANCE IN GHANA

GUIDELINES FOR TAX COMPLIANCE IN GHANA

Taxes in Ghana

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

8. In Ghana the applicable taxes are;

  • Corporate tax – 25%
  • VAT and NHIL – 17.5%
  • VAT Flat Rate Scheme (VFRS) – 3%
  • Capital gains tax -15%
  • Dividend tax – 25%
  • Annual income tax rates – Find below
Chargeable Income (GH¢) Rate (%) Tax (GH¢) Cumulative Chargeable Income (GH¢) Cumulative Tax (GH¢)
First 2,592 Free NIL 2,592.00 NIL
Next 1,296 5 64.80 3,888.00 64.80
Next 1,812 10 181.20 5,700.00 246.00
Next 33,180 17.5 5,806.50 38,880.00 6,052.50
Exceeding 38,880 25%

 

  • Monthly income tax rates – Find below
Chargeable Income (GH¢) Rate (%) Tax (GH¢) Cumulative Chargeable Income (GH¢) Cumulative Tax (GH¢)
First 216 NIL NIL 216 NIL
Next 108 5 5.40 324 5.40
Next 151 10 15.10 475 20.50
Next 2,765 17.5 483.88 3240 504.38
Exceeding 3,240 25%

 

9. 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%

Withholding taxes in Ghana

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

Income Rate (%) Comments
Interest paid to Individual 1 On Account
Fees, allowance to resident director/manager, board member, trustee 20 On Account
Fees to lecturers, invigilators, examiners, part-time teachers, non-executive directors/board members and endorsement fees 10 Final
Commissions to insurance agents, sales and persons 10 On account
Commissions to resident lotto  receivers or agents 10 On account
Supply of goods exceeding GH₵ 2,000 p.a 3 On account
Supply of works 5 On account
Supply of services 7.5 On account
Lottery winnings 5 Final
Payment to petroleum subcontractor 15 Final
Payment for unprocessed precious minerals 10 On account
Rent on Properties i.e Payment to an individual.

Non –Business

·         Residential

·         Non -Residential

 

 

8

15

 

 

Final

Final

Rent on Properties i.e Payment to persons other than individual

Business Income

-Residential

-Non –Residential

Non-Business Income

-Residential

-Non-Residential

 

 

 

8

15

 

8

15

 

 

 

On Account

On Account

 

Final

Final

Royalty, natural resource payment 15 On account
Interest or dividend paid to a member or a holder of an approved unit trust or mutual fund 1 Final
Interest or dividend paid or credited to a person on a qualifying investment in a qualifying venture capital financing company for the first 10 years 1 Final

The threshold for withholding tax for the supply of goods, works and services have been increased from GH₵500 to GH₵2,000.

 

Tax filings

11. 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.

 

12. The penalty for late filing of tax returns are:

  • VAT – After the last working day you will pay Gh₵500. 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

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

 

  1. During an audit, the tax officers typically assess 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 on the balance sheet as well.

Are you looking to start your business in Ghana? Do you know what you need to register a business in Ghana? Click here to register for Ghana Regulatory Compliance Forum at the British Council.

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