Last modified: 05/04/2024 10:05

Corporate taxation

1. General Corporate Income Tax Rate    :           25%    
2. Petroleum Operations                           :           35%
3. Mining Operations                                :           35%
4. Hotel Industry                                       :           22%
5. Lottery Operations                                :           20% (of gross gaming revenue)
6. Branch Tax          Resident                   :           25%
7. Branch Tax         Non- Resident           :           8% on earned repatriated profits, payable within 30 days.
8. Capital Gain Tax                                   :          25%

Residence: Under Ghanaian tax law, the residency status for companies determines their tax obligations in the country A Company is resident if it is incorporated under laws of Ghana or has its management and control exercised in Ghana at any time during a year of assessment. Additionally, a foreign company is considered a tax resident in Ghana if it carries on business through a permanent establishment in Ghana during the tax year.

Basis: A resident Company is taxed on a worldwide basis i.e. on Income earned in Ghana and abroad. A non-resident company is taxed in Ghana to the extent that the income has a source in Ghana or where the company has a Ghanaian permanent establishment, income for the year that is connected with the permanent establishment, irrespective of the source of the income. If a non-resident owns a business that is a Permanent Establishment (PE) in Ghana, both the local and foreign Income of that business are taxable irrespective of the source of Income.

Taxable income: The taxable income of a company is determined based on its accounting profits, adjusted for tax purposes in accordance with the provisions of the Income Tax Act. Adjustments may include deductions for allowable expenses, depreciation, capital allowances, and certain exemptions or incentives provided by the tax laws.

Significant local taxes on income: In addition to Corporate Income Tax (CIT), there are several significant local taxes on corporate income in Ghana. These taxes are levied by local authorities and may vary depending on the specific location and business activities. Some of the significant local taxes on corporate income in Ghana include:

Business Operating Permit (BOP): Many local authorities in Ghana require businesses to obtain a Business Operating Permit or Business Operating License before commencing operations. The fees for these permits vary depending on factors such as the size of the business, its location, and the nature of its activities. Property Rates: Property rates, also known as property taxes, are levied on the value of immovable properties owned by businesses within the jurisdiction of local authorities. These rates are typically based on the assessed market value of the property and are used to fund local government services and infrastructure development.

Business Rates: Some local authorities impose business rates or levies on businesses operating within their jurisdiction. These rates may be based on factors such as the size of the business premises, the nature of the business activities, or the turnover of the business. Signage Fees: Local authorities may charge fees for the installation and maintenance of business signage, billboards, or advertising displays. These fees contribute to the regulation of outdoor advertising and the maintenance of public spaces within the locality.

Market Toll Fees: Businesses engaged in trading activities or operating within local markets may be required to pay market toll fees or levies to local authorities. These fees contribute to the maintenance and administration of local markets and trading facilities.

Entertainment Taxes: Some local authorities impose taxes or levies on businesses engaged in entertainment activities such as cinemas, theaters, nightclubs, and live music venues. These taxes may be based on ticket sales, admission fees, or revenue generated from entertainment events. Environmental Sanitation Levy: Local authorities may levy environmental sanitation fees or levies on businesses to fund waste management and sanitation services within their jurisdiction. These levies contribute to the maintenance of clean and healthy environments.

Alternative minimum tax: A company may be required to compute and pay tax on a minimum chargeable income of 5% of turnover where the person has been declaring losses for the previous five years of assessment. The minimum chargeable income, however, does not apply to a person engaged in farming or a business which commenced operations within the first five years.

Taxation of dividends: Dividends paid within Ghana are subject to a withholding tax at the rate of 8%1. This means that when companies distribute dividends to their shareholders, they withhold 8% of the dividend amount as tax before paying it out. The recipient will not be taxed on the amount received after the 8% tax withheld. Dividends received in Ghana from non-resident or foreign companies are considered investment income. For individual taxpayers, this investment income is included in their assessable income and taxed at a graduated rate ranging from 5% to 25%1.

Capital gains: Capital gains from the sale of assets are generally taxed in Ghana. For companies, it is taxed at the rate of 25% For businesses, the Capital Gains are included in the business’ annual returns and taxed accordingly.

Losses: Under Ghanaian tax laws, businesses and individuals can carry forward losses for up to five consecutive years following the year in which the loss was incurred. However, the losses must be properly documented and reported in the tax returns for each year in which they are carried forward. Carried forward losses can be used to reduce taxable income from the same business or source of income in future years. This allows taxpayers to benefit from the losses incurred in previous years by offsetting them against future profits, thereby reducing their overall tax liability. It’s important for taxpayers to accurately track and report their carried forward losses in accordance with Ghanaian tax regulations to ensure compliance and maximize tax benefits. Additionally, taxpayers should seek professional advice from tax experts or advisors to fully understand the rules and implications of carrying forward losses in Ghana.

Foreign tax relief: A resident is entitled to a credit in respect to any foreign income tax paid, to the extent to which the tax paid is in respect of the resident’s foreign taxable income. The foreign tax credit available on a specific income type should not exceed the average rate of Ghanaian income tax of the resident for a year. These include: -Income of Individual entitled to Diplomats. -Income of non-resident from operating of ships and other services where equivalent exemption is granted to persons resident in Ghana. -Income of Individuals who have already paid taxes on abroad where the country has a double tax agreement with Ghana.

Participation exemption: In Ghana, participation exemption tax refers to a tax provision that exempts certain types of income from taxation. Let’s delve into the specifics: Income Tax Exemptions: Salary, allowances, facilities, pension, and gratuity of the President: These are exempt from taxation. Income directly connected to the Government or local authorities’ activities: Such income is also exempt. Income of a non-commercial public corporation: Non-commercial public corporations enjoy this exemption.

Pension: Pension income is not subject to taxation. Income of a cocoa farmer from cocoa: Cocoa farmers receive an exemption on their income from cocoa production. Other types of income that are exempt from taxes: Gain from life insurance when the proceeds are paid by a resident insurer. Income of a non-resident person from a business that operates ships or aircraft, provided an equivalent exemption is granted by that person’s country of residence to persons resident in Ghana. A dividend paid to a resident company by another resident company when the receiving company controls at least 25% of the voting power in the paying company (with exceptions for certain special industries). Interest or dividend on an investment paid to a holder or member of an approved unit trust scheme or mutual fund. Interest and gains realized by a non-resident person on bonds issued by the government of Ghana. Gains from the realization of GSE-listed securities. Income of an approved unit trust or mutual fund. Income of an approved Real Estate Investment Trust. Any other exemption granted by law1.

Deductions: An expense is deductible if it is wholly, exclusively, and necessarily incurred in the production of business or investment income for the year. Expenses of a capital nature (lasting more than twelve months) are disallowed as deductions. Allowable Deductions: Interest incurred in borrowing money or in the production of income. Trading stock.

Holding-company regime: In Ghana, the taxation of holding companies is governed by the country’s tax laws and regulations, which are administered by the Ghana Revenue Authority (GRA). While Ghana does not have specific provisions labeled as a “holding company regime,” certain aspects of the tax laws may apply to holding companies operating within the country. Here are some key points regarding taxation in Ghana: Corporate Income Tax: Ghana imposes a corporate income tax on the profits earned by companies registered in the country. The current corporate tax rate is 25%. This tax is applicable to holding companies on any income generated from their investments in subsidiary companies, including dividends received from those subsidiaries.

Dividend Income: Dividends received by holding companies from their subsidiaries are generally subject to tax at the standard corporate income tax rate. However, Ghana allows for a partial tax exemption on dividends received from subsidiaries that are resident in Ghana. The portion of the dividend exempt from tax depends on the ownership percentage of the holding company in the subsidiary.

Capital Gains Tax: Capital gains realized by holding companies from the sale of shares in subsidiary companies are subject to capital gains tax in Ghana. The current capital gains tax rate is 15%. Group Relief: Ghana allows for the consolidation of tax liabilities and losses within a group of companies. Holding companies may offset profits with losses incurred by their subsidiary companies, subject to certain conditions and limitations.

Tax Treaties: Ghana has entered into double tax treaties with several countries to prevent double taxation and provide relief for taxes paid in foreign jurisdictions. Holding companies may benefit from these treaties in terms of reduced withholding tax rates on dividends, interest, and royalties received from foreign subsidiaries. It’s important for holding companies operating in Ghana to comply with the country’s tax laws and regulations, including filing tax returns, paying taxes on time, and maintaining proper documentation. Failure to comply with Ghanaian tax laws may result in penalties, fines, or other enforcement actions by the GRA. Additionally, holding companies should seek professional tax advice to optimize their tax positions and ensure compliance with applicable laws.

Tax-based incentives: In Ghana, the taxation of holding companies is governed by the country’s tax laws and regulations, which are administered by the Ghana Revenue Authority (GRA). While Ghana does not have specific provisions labeled as a “holding company regime,” certain aspects of the tax laws may apply to holding companies operating within the country. Here are some key points regarding taxation in

Ghana: Some businesses (sector specific) pay 1% tax during their tax holidays and are mandated to pay the actual tax rates after the tax holidays have expired Eg: Agro processing business conducted wholly in the country Cocoa-by product business wholly in the country Tree crop farming Cash crops or livestock ( excluding cattle) Cattle farming Waste processing business

1. Corporate Income Tax: Ghana imposes a corporate income tax on the profits earned by companies registered in the country. The current corporate tax rate is 25%. This tax is applicable to holding companies on any income generated from their investments in subsidiary companies, including dividends received from those subsidiaries.

2. Dividend Income:

Dividends received by holding companies from their subsidiaries are generally subject to tax at the standard corporate income tax rate. However, Ghana allows for a partial tax exemption on dividends received from subsidiaries that are resident in Ghana. The portion of the dividend exempt from tax depends on the ownership percentage of the holding company in the subsidiary.

3. Capital Gains Tax: Capital gains realized by holding companies from the sale of shares in subsidiary companies are subject to capital gains tax in Ghana. The current capital gains tax rate is 15%.

4. Group Relief: Ghana allows for the consolidation of tax liabilities and losses within a group of companies. Holding companies may offset profits with losses incurred by their subsidiary companies, subject to certain conditions and limitations.

5. Tax Treaties: Ghana has entered into double tax treaties with several countries to prevent double taxation and provide relief for taxes paid in foreign jurisdictions. Holding companies may benefit from these treaties in terms of reduced withholding tax rates on dividends, interest, and royalties received from foreign subsidiaries. It’s important for holding companies operating in Ghana to comply with the country’s tax laws and regulations, including filing tax returns, paying taxes on time, and maintaining proper documentation. Failure to comply with Ghanaian tax laws may result in penalties, fines, or other enforcement actions by the GRA. Additionally, holding companies should seek professional tax advice to optimize their tax positions and ensure compliance with applicable laws.

Group relief/fiscal unity: In Ghana, tax-based incentives are provided by the government to encourage investment, stimulate economic growth, and promote specific industries or activities. These incentives are typically offered in the form of tax exemptions, reductions, credits, or holidays, aimed at reducing the overall tax burden on businesses and individuals. Some common tax-based incentives available in Ghana include: Free Zones Incentives: The Ghana Free Zones Authority (GFZA) provides various tax incentives to companies operating within designated free zones. These incentives include exemptions from corporate income tax, import duties, and value-added tax (VAT) on raw materials and machinery imported for production purposes. Investment

Allowances: Certain industries or projects may qualify for investment allowances, allowing businesses to deduct a portion of their capital expenditures from taxable income. This encourages investment in specific sectors such as agriculture, manufacturing, and infrastructure development. Tax Holidays: The government may grant tax holidays to newly established businesses or companies operating in certain priority sectors. During the tax holiday period, businesses are exempt from paying corporate income tax or are subject to reduced tax rates for a specified period. Accelerated Depreciation:

Businesses investing in fixed assets such as machinery, equipment, or buildings may benefit from accelerated depreciation allowances, allowing them to deduct a larger portion of the asset’s cost from taxable income in the early years of its use. Export Incentives: Export-oriented businesses may qualify for tax incentives such as tax credits, exemptions, or reduced rates on income derived from exports. These incentives aim to promote international trade, increase export earnings, and enhance competitiveness in global markets.

Research and Development (R&D) Tax Credits: Companies engaged in research and development activities may be eligible for tax credits or deductions for qualified R&D expenditures. This encourages innovation, technology transfer, and the development of new products and services. Renewable Energy Incentives: The government provides tax incentives to promote investments in renewable energy projects such as solar, wind, hydro, and biomass. These incentives may include tax holidays, exemptions from import duties on renewable energy equipment, and preferential tax treatment for income generated from renewable energy sources.

Special Economic Zones (SEZs): Special Economic Zones offer tax incentives and regulatory benefits to attract investment, stimulate economic development, and create employment opportunities in designated geographic areas. These incentives may include tax holidays, reduced tax rates, and simplified customs procedures. It’s important for businesses and investors to carefully evaluate the eligibility criteria, conditions, and compliance requirements associated with tax-based incentives in Ghana. Proper planning, documentation, and compliance with regulatory requirements are essential to fully benefit from these incentives while ensuring compliance with applicable tax laws and regulations.

Additionally, seeking professional advice from tax experts or advisors can help businesses optimize their tax positions and leverage available incentives effectively. User Group relief/fiscal unity Taxation in Ghana ChatGPT Group relief, also known as fiscal unity taxation, refers to a tax arrangement where companies within a group can offset their profits and losses against each other for tax purposes. This arrangement allows companies within the same group to consolidate their tax liabilities, potentially reducing their overall tax burden. In Ghana, there are provisions for group relief in the tax laws administered by the Ghana Revenue Authority (GRA).

These provisions allow companies that are part of the same group to offset their profits and losses, subject to certain conditions and limitations. Key features of group relief/fiscal unity taxation in Ghana may include: Eligibility Criteria: To qualify for group relief, companies must be part of the same group, which is typically defined based on ownership and control criteria. The GRA may require companies to meet specific ownership thresholds or have a common parent company to be eligible for group relief.

Consolidation of Profits and Losses: Under group relief, companies within the same group can consolidate their profits and losses for tax purposes. This means that profits earned by one company can be offset against losses incurred by another company within the group, reducing the group’s overall taxable income. Transfer of Taxable Losses: Group relief allows companies with taxable profits to transfer their losses to other group companies with taxable income, effectively reducing the group’s tax liability. This can help optimize tax planning and mitigate tax risks within the group.

Compliance Requirements: Companies seeking to avail themselves of group relief must comply with reporting and documentation requirements specified by the GRA. This may include filing consolidated tax returns, providing evidence of group membership, and maintaining proper records of intercompany transactions. Limitations and Restrictions: Group relief provisions may have limitations and restrictions to prevent abuse or tax avoidance. For example, there may be restrictions on the types of losses that can be transferred, such as capital losses or losses from non-trade activities. Anti-avoidance Measures: The GRA may have anti-avoidance measures in place to prevent artificial arrangements aimed at exploiting group relief provisions for tax benefits. Companies engaging in abusive tax planning or artificial transactions may be subject to penalties or sanctions. Overall, group relief/fiscal unity taxation in Ghana provides opportunities for companies within the same group to optimize their tax positions, streamline compliance, and enhance tax efficiency. However, it’s essential for companies to understand the eligibility criteria, compliance requirements, and limitations associated with group relief to effectively utilize this tax arrangement while ensuring compliance with Ghanaian tax laws and regulations.

Small company/alternative tax regimes: In Ghana, small companies and certain types of businesses may be eligible for alternative tax regimes designed to provide tax relief and support for startups, micro-enterprises, and small businesses. These alternative tax regimes aim to simplify tax compliance, reduce administrative burdens, and promote entrepreneurship and economic growth. Some key alternative tax regimes available in Ghana include: Small Taxpayer Regime: Small taxpayers typically benefit from reduced tax rates compared to larger businesses.

For example, small companies may be subject to a corporate income tax rate of 1% on turnover instead of the standard corporate tax rate of 25% on profits. Presumptive Tax Regime: Under the presumptive tax regime, businesses are taxed based on presumptive income estimates, often calculated as a percentage of gross turnover or assets. The tax rates may vary depending on the specific business activity and location but are generally lower than the standard corporate income tax rate.

Flat Rate Scheme: Businesses participating in the flat rate scheme pay tax at a flat rate on their turnover or gross receipts. The flat rate may range from 1% to 5% of turnover, depending on the industry or business activity. Tax Exemptions and Incentives: Businesses eligible for tax exemptions or incentives may benefit from reduced or zero tax rates on certain types of income or activities.

For example, start-up’s or businesses operating in priority sectors may enjoy tax holidays or reduced tax rates for a specified period. Informal Sector Taxation: Informal sector businesses may be subject to simplified tax rates or fixed tax amounts based on factors such as location, business activity, or turnover. These tax rates are typically lower than the rates applicable to formal sector businesses. It’s important for small companies and businesses to consult with tax authorities or professional tax advisors to determine the specific tax rates applicable to their circumstances and ensure compliance with Ghanaian tax laws and regulations.

Additionally, tax rates and incentives may be subject to change based on government policies and economic conditions, so businesses should stay informed about updates and changes to the tax regime.

Corporate taxation: compliance

Tax year: In Ghana, the tax year refers to the 12-month period during which taxpayers are required to report their income, calculate their tax liability, and file their tax returns with the Ghana Revenue Authority (GRA). The tax year in Ghana typically runs from January 1st to December 31st each calendar year. During the tax year, individuals, businesses, and other entities are required to keep records of their income, expenses, deductions, and other relevant financial information. They must use this information to prepare accurate tax returns and fulfill their tax obligations in accordance with Ghanaian tax laws and regulations. Taxpayers are generally required to file their tax returns for the preceding tax year by a specified deadline, which is typically a few months after the end of the tax year. For example, taxpayers may be required to file their tax returns for the 2023 tax year by April 30th, 2024.

Consolidated returns: Key points regarding consolidated returns in taxation in Ghana include: Group of Companies: Consolidated returns are typically applicable to companies that are part of the same group, which may be defined based on ownership and control criteria. The group may consist of parent companies, subsidiaries, and other related entities. Tax Consolidation: Under the consolidated return method, the profits, losses, deductions, and other tax attributes of each group member are combined and reported on a single tax return for the entire group. This allows for the offsetting of profits with losses incurred by other group members, potentially reducing the group’s overall taxable income.

Compliance Requirements: Companies seeking to file consolidated returns must comply with specific reporting and documentation requirements outlined by the Ghana Revenue Authority (GRA). This may include filing a consolidated tax return, providing evidence of group membership, and maintaining proper records of intercompany transactions. Limitations and Restrictions: Consolidated returns may have limitations and restrictions to prevent abuse or tax avoidance. For example, there may be restrictions on the types of losses that can be consolidated or transferred between group members, such as capital losses or losses from non-trade activities. Anti-avoidance Measures: The GRA may have anti-avoidance measures in place to prevent artificial arrangements aimed at exploiting consolidated return provisions for tax benefits. Companies engaging in abusive tax planning or artificial transactions may be subject to penalties or sanctions for non-compliance. Consolidated returns in Ghana provide opportunities for companies within the same group to optimize their tax positions, streamline compliance, and enhance tax efficiency. However, it’s essential for companies to understand the eligibility criteria, compliance requirements, and limitations associated with consolidated returns to effectively utilize this tax filing method while ensuring compliance with Ghanaian tax laws and regulations

Filing and payment: The process involves submitting tax returns to the Ghana Revenue Authority (GRA) and remitting the appropriate amount of tax owed within specified deadlines. Here’s an overview of filing and payment procedures in Ghana: Tax Returns: Taxpayers are required to prepare and submit tax returns to the GRA, reporting their income, deductions, and other relevant financial information for the applicable tax year. Tax returns may vary depending on the type of taxpayer and the nature of income earned.

Filing Deadlines: The deadline for filing tax returns in Ghana varies depending on the type of taxpayer and the tax year. For example, individuals may be required to file their annual income tax returns by April 30th of the following tax year, while companies may have different filing deadlines based on their fiscal year-end. Payment of Taxes: Upon filing tax returns, taxpayers are required to remit the amount of tax owed to the GRA by the specified deadline. Payments can be made through various channels, including bank transfers, electronic payment platforms, or in-person at designated GRA offices or banks. Tax Assessments: After receiving tax returns, the GRA may assess the tax liability of the taxpayer based on the information provided. Tax assessments may include adjustments or corrections to reported income, deductions, or tax credits, and taxpayers are required to comply with any assessment issued by the GRA.

Penalties: Penalties and Interest: Failure to file tax returns or pay taxes on time may result in penalties, fines, or interest charges imposed by the GRA. Penalties may vary depending on the type of tax and the duration of non-compliance, and taxpayers should ensure timely compliance to avoid additional costs. The Revenue Administration Act, 2016 stipulated activities and actions that are considered tax offences and their associated consequences in terms of interest, penalties, fines and/or prosecution to the offender of that act. There are two categories of penalties Offences which attract pecuniary penalties:

These types of offences are mainly administrative powers given to the Commissioner General to impose monetary fines as a result of failure to comply with the tax law. The pecuniary penalties are in addition to the original tax liability and they do not relief a person from criminal proceedings in court. Offences which attract imprisonments or both imprisonment and pecuniary penalties: The taxpayer can still be criminally prosecuted depending on the circumstances. This in addition to the monetary fines are mostly imposed by the court. The penalty regime in Ghana is predominately based on the degree of culpability of the taxpayer towards his tax obligations. The degree of culpability ranges from deliberate attempt to reduce tax liability to careless preparation of tax returns and records keeping. Taxpayers are therefore supposed to exercise care when calculating their taxes and filling tax returns.

Rulings: Rulings refer to official interpretations or decisions issued by the Ghana Revenue Authority (GRA) regarding specific tax matters or transactions. These rulings provide clarity and guidance to taxpayers on how certain provisions of the tax laws apply to their particular circumstances. Here are some key aspects of rulings in taxation in Ghana: Types of Rulings: The GRA may issue various types of rulings to taxpayers, including advance rulings, binding rulings, and interpretative rulings. Advance rulings are issued in response to requests from taxpayers seeking clarification on the tax treatment of proposed transactions before they are executed. Binding rulings provide definitive guidance on the tax implications of specific transactions or arrangements, and taxpayers are required to comply with them. Interpretative rulings offer explanations or interpretations of tax laws and regulations to assist taxpayers in understanding their obligations.

Requesting Rulings: Taxpayers can request rulings from the GRA by submitting formal applications or requests that outline the relevant facts and circumstances of the proposed transaction or issue. Requests for rulings should be accompanied by supporting documentation and may require payment of a fee. The GRA evaluates the request and issues a ruling based on its interpretation of the applicable tax laws and regulations. Legal Effect: Rulings issued by the GRA have legal effect and are binding on both the taxpayer and the tax authority. Taxpayers are expected to comply with the rulings issued to them, and deviations from the rulings may result in penalties or other enforcement actions by the GRA.

Transparency and Consistency: The GRA strives to ensure transparency and consistency in its rulings process to promote fairness and predictability in the application of tax laws. Rulings are typically published or made available to the public to provide guidance to other taxpayers facing similar issues or transactions. Appeals and Review: Taxpayers have the right to appeal rulings issued by the GRA if they disagree with the decision or interpretation provided. Appeals are typically filed with the appropriate tax appeals tribunal or administrative review board, which conducts a review of the ruling and renders a decision based on the merits of the case.

Taxation of individuals

MONTHLY RATES (EFFECTIVE 1ST JANUARY 2024)
	INCOME	RATE	TAX	CUMULATIVE INCOME	CUMULATIVE TAX
FIRST GH¢	490	FREE	–	402	0
NEXT GH¢	110	5%	5.50	600.00	5.50
NEXT GH¢	130	10%	13.00	730.00	18.50
NEXT GH¢	3,166.67	17.5%	554.17	3,896.67	572.67
NEXT GH¢	16,000	25%	4,000.00	19,896.67	4,572.67
NEXT GH¢	30,520	30%	9156.00	50,416.67	13,728.67
EXCEEDING	50,000.00	35%

Residence: Under Ghanaian tax law, the residency status for individuals determines their tax obligations in the country For individuals, residency is established based on the number of days spent in Ghana during a tax year. An individual is considered a resident for tax purposes if they are present in Ghana for 183 days or more in any 12-month period that commences or ends during the tax year. Additionally, an individual who is present in Ghana for an aggregate of 91 days or more in any 12-month period that falls within the tax year and has a permanent home available in Ghana is also considered a tax resident.

Basis: A resident individual is taxed on a worldwide basis i.e. on Income earned in Ghana and abroad. A non-resident individual is taxed in Ghana to the extent that the income has a source in Ghana or where the individual has a Ghanaian permanent establishment, income for the year that is connected with the permanent establishment, irrespective of the source of the income. If a non-resident owns a business that is a Permanent Establishment (PE) in Ghana, both the local and foreign Income of that business are taxable irrespective of the source of Income.

Taxable income: Individual income tax is imposed on various types of income earned by residents, including employment income, business profits, rental income, investment income, and other sources of income. Certain types of income may be exempt from tax or subject to special tax treatment under the tax laws.

Capital gains: Capital gains are subject to taxation as part of an individual’s taxable income in Ghana. The gain is included in the individual’s total income for the year and taxed at the applicable individual income tax rates. For Individuals, the gain can also be treated as an isolated transaction and therefore taxed at a rate of 15% of the net gains realized.

Deductions and allowances: Individuals may benefit from various deductions and allowances when calculating their taxable income for individual income tax purposes. These deductions and allowances help reduce the amount of income subject to tax, thereby lowering the overall tax liability. Common deductions and allowances include personal reliefs for spouses, children, and dependents, contributions to social security and pension schemes, charitable donations, educational expenses, medical costs, and business expenses for self-employed individuals

Foreign tax relief: To claim foreign tax relief in Ghana, taxpayers must meet certain criteria and follow specific reporting requirements outlined by the Ghana Revenue Authority (GRA). This may include providing documentation such as tax receipts, certificates of tax residence, and other supporting documents to substantiate the foreign taxes paid. It’s important for taxpayers to accurately report their foreign income and taxes paid in their Ghanaian tax returns to claim the appropriate relief. Failure to do so may result in double taxation or penalties for non-compliance.

Taxation of individuals: compliance

Tax year: In Ghana, the tax year refers to the 12-month period during which taxpayers are required to report their income, calculate their tax liability, and file their tax returns with the Ghana Revenue Authority (GRA). The tax year in Ghana typically runs from January 1st to December 31st each calendar year. During the tax year, individuals, businesses, and other entities are required to keep records of their income, expenses, deductions, and other relevant financial information. They must use this information to prepare accurate tax returns and fulfill their tax obligations in accordance with Ghanaian tax laws and regulations. Taxpayers are generally required to file their tax returns for the preceding tax year by a specified deadline, which is typically a few months after the end of the tax year. For example, taxpayers may be required to file their tax returns for the 2023 tax year by April 30th, 2024.

Filing and payment: The process involves submitting tax returns to the Ghana Revenue Authority (GRA) and remitting the appropriate amount of tax owed within specified deadlines. Here’s an overview of filing and payment procedures in Ghana: Tax Returns: Taxpayers are required to prepare and submit tax returns to the GRA, reporting their income, deductions, and other relevant financial information for the applicable tax year. Tax returns may vary depending on the type of taxpayer and the nature of income earned.

Filing Deadlines: The deadline for filing tax returns in Ghana varies depending on the type of taxpayer and the tax year. For example, individuals may be required to file their annual income tax returns by April 30th of the following tax year, while companies may have different filing deadlines based on their fiscal year-end. Payment of Taxes: Upon filing tax returns, taxpayers are required to remit the amount of tax owed to the GRA by the specified deadline. Payments can be made through various channels, including bank transfers, electronic payment platforms, or in-person at designated GRA offices or banks. Tax Assessments: After receiving tax returns, the GRA may assess the tax liability of the taxpayer based on the information provided. Tax assessments may include adjustments or corrections to reported income, deductions, or tax credits, and taxpayers are required to comply with any assessment issued by the GRA.

Penalties: Penalties and Interest: Failure to file tax returns or pay taxes on time may result in penalties, fines, or interest charges imposed by the GRA. Penalties may vary depending on the type of tax and the duration of non-compliance, and taxpayers should ensure timely compliance to avoid additional costs. The Revenue Administration Act, 2016 stipulated activities and actions that are considered tax offences and their associated consequences in terms of interest, penalties, fines and/or prosecution to the offender of that act. There are two categories of penalties Offences which attract pecuniary penalties: These types of offences are mainly administrative powers given to the Commissioner General to impose monetary fines as a result of failure to comply with the tax law. The pecuniary penalties are in addition to the original tax liability and they do not relief a person from criminal proceedings in court. Offences which attract imprisonments or both imprisonment and pecuniary penalties: The taxpayer can still be criminally prosecuted depending on the circumstances. This in addition to the monetary fines are mostly imposed by the court. The penalty regime in Ghana is predominately based on the degree of culpability of the taxpayer towards his tax obligations. The degree of culpability ranges from deliberate attempt to reduce tax liability to careless preparation of tax returns and records keeping. Taxpayers are therefore supposed to exercise care when calculating their taxes and filling tax returns.

Rulings: Types of Rulings: The GRA may issue various types of rulings to individual taxpayers, including advance rulings, binding rulings, and interpretative rulings. Advance rulings provide guidance on the tax treatment of proposed transactions before they are executed, while binding rulings offer definitive guidance on specific tax issues or transactions. Interpretative rulings explain or interpret tax laws and regulations to assist taxpayers in understanding their tax obligations. Requesting Rulings: Individual taxpayers can request rulings from the GRA by submitting formal applications or requests outlining the relevant facts and circumstances of their tax issue or transaction. Requests for rulings should be accompanied by supporting documentation and may require payment of a fee. The GRA evaluates the request and issues a ruling based on its interpretation of the applicable tax laws and regulations.

Legal Effect: Rulings issued by the GRA have legal effect and are binding on both the taxpayer and the tax authority. Taxpayers are expected to comply with the rulings issued to them, and deviations from the rulings may result in penalties or other enforcement actions by the GRA. Transparency and Consistency: The GRA aims to ensure transparency and consistency in its rulings process to promote fairness and predictability in the application of tax laws. Rulings are typically published or made available to the public to provide guidance to other taxpayers facing similar issues or transactions. Appeals and Review: Taxpayers have the right to appeal rulings issued by the GRA if they disagree with the decision or interpretation provided. Appeals are typically filed with the appropriate tax appeals tribunal or administrative review board, which conducts a review of the ruling and renders a decision based on the merits of the case.

Withholding taxes

Types of Payment	Resident Company		Non-Resident Company
	Company	Individual	Company	Individual
Dividends	8%	8%	8%	8%
Interest	8%	8%	8%	8%
Royalties	15%	15%	15%	15%
Management Fees	20%	20%	20%	20%
Technical Service Fees	15%	15%	20%	20%
Rent Income	15%	8%	20%	15%
Commission Income	8%	8%	20%	20%

Branch remittance tax: Branch Profit Tax – 8%

Anti-avoidance legislation

Transfer pricing: Ghana has Transfer legislation which exists to prevent companies avoiding taxes by means of transfer pricing. The transfer pricing legislation (L.I 2412, 2020) requires companies to file their transfer pricing returns and documentation together with tax returns. Transfer pricing regulations in Ghana require related-party transactions to be conducted at arm’s length prices to prevent the shifting of profits between affiliated entities for tax avoidance purposes. Tax authorities may require taxpayers to prepare transfer pricing documentation and may conduct transfer pricing audits to ensure compliance with the regulations.

Interest restriction: In Ghana, interest restriction rules are designed to curb profit shifting and base erosion by limiting the tax deductibility of interest expenses incurred by taxpayers. These rules aim to ensure that taxpayers do not exploit financing structures solely for the purpose of reducing their tax liability without genuine economic substance. Key features of interest restriction rules in Ghana may include:

Thin Capitalization Rules: Thin capitalization rules may be implemented to limit the deductibility of interest expenses where a taxpayer’s debt-to-equity ratio exceeds a certain threshold. This prevents taxpayers from artificially inflating their debt levels to maximize interest deductions. Fixed Ratio Rule: Under a fixed ratio rule, a specified percentage of the taxpayer’s earnings before interest, taxes, depreciation, and amortization (EBITDA) may be used as a benchmark to determine the maximum allowable interest deduction. Any interest expense exceeding this threshold may be disallowed for tax purposes.

Group Ratio Rule: Alternatively, group ratio rules may allow taxpayers to deduct interest expenses based on the ratio of their interest expense to their group’s consolidated EBITDA. This approach takes into account the taxpayer’s overall financial position within the group and may provide greater flexibility for multinational enterprises. Exemptions and Safe Harbors: Certain exemptions or safe harbor provisions may be provided to exempt certain types of financing arrangements or to provide relief for taxpayers engaged in legitimate commercial activities.

For example, interest expenses incurred for specific purposes such as infrastructure projects or public-private partnerships may be exempt from interest restriction rules. Reporting and Compliance: Taxpayers are typically required to disclose their financing arrangements and interest expenses in their tax returns, along with any applicable adjustments or disallowances made under interest restriction rules. Compliance with these rules may involve detailed documentation and analysis of financing structures to ensure compliance with the law.

Controlled foreign companies: This is not applicable in Ghana.

Hybrid mismatches: Hybrid Mismatch Rules: Ghana has introduced specific provisions in its tax laws to address hybrid mismatches. These rules aim to eliminate the tax advantages arising from hybrid instruments or entities by denying deductions or imposing additional taxation on the mismatched income.

Definition of Hybrid Mismatches: Ghanaian tax laws define the types of arrangements or instruments that may give rise to hybrid mismatches. This includes hybrid financial instruments, hybrid entities, and hybrid transfers, among others.

Disallowed Deductions: Under the anti-avoidance legislation, deductions associated with hybrid mismatches may be disallowed for tax purposes. This prevents taxpayers from claiming double deductions or exploiting differences in tax treatment between jurisdictions. Taxation of Mismatched Income: Ghana may impose additional taxation on income that gives rise to hybrid mismatches. This ensures that income is not left untaxed or subject to double non-taxation due to differences in tax treatment between jurisdictions.

Documentation and Reporting Requirements: Taxpayers engaging in transactions that may give rise to hybrid mismatches may be required to maintain documentation and comply with reporting requirements specified by the tax authorities. This helps ensure transparency and enables tax authorities to assess and address potential tax avoidance strategies effectively. Coordination with International Standards: Ghana may align its anti-avoidance legislation on hybrid mismatches with international standards and best practices, including recommendations from organizations such as the Organisation for Economic Co-operation and Development (OECD).

Disclosure requirements: Ghana tax laws mandate disclosure requirements and anti-avoidance legislation to ensure transparency and compliance in tax matters. Disclosure requirements entail submitting financial and tax-related information to the Ghana Revenue Authority (GRA) through annual tax returns, financial statements, and transfer pricing documentation

Exit taxes: Here are some key points regarding exit taxes and anti-avoidance legislation in Ghana: Application: Exit taxes in Ghana may apply to individuals or businesses that transfer assets or businesses out of the country’s tax jurisdiction. This can include the transfer of tangible assets such as real estate or intangible assets such as intellectual property rights, as well as the transfer of businesses or corporate entities.

Taxable Events: The imposition of exit taxes in Ghana may be triggered by various taxable events, including the transfer of assets or businesses to another country, the liquidation or dissolution of a Ghanaian entity, or the migration of a taxpayer’s tax residence from Ghana to another jurisdiction. Calculation: The calculation of exit taxes in Ghana typically involves determining the fair market value of the transferred assets or businesses at the time of the exit event. The taxable gain or profit resulting from the transfer is then subject to taxation at the applicable capital gains tax rate or other relevant tax rate.

Compliance: Taxpayers subject to exit taxes in Ghana are required to comply with reporting and payment requirements specified by the Ghana Revenue Authority (GRA). Failure to accurately report and pay exit taxes may result in penalties, fines, or other enforcement actions by the GRA. Anti-Avoidance Measures: Exit taxes are often accompanied by anti-avoidance measures aimed at preventing taxpayers from artificially shifting profits or assets out of the country to avoid taxation.

These measures may include rules regarding transfer pricing, controlled foreign companies, thin capitalization, and other provisions intended to counter tax avoidance strategies. Tax Treaties: Ghana may have tax treaties or agreements with other countries that affect the imposition of exit taxes and the taxation of cross-border transactions. Taxpayers should consider the provisions of these treaties when planning transactions that may trigger exit taxes.

General anti-avoidance rule: The Commissioner-General may re-characterize or disregard an arrangement that is entered into or carried out as part of a tax avoidance scheme which is fictitious or does not have a substantial economic effect or whose form does not reflect its substance.

The General Anti-Avoidance Rule (GAAR) in Ghana is a provision within the tax legislation aimed at preventing taxpayers from engaging in artificial or abusive tax avoidance practices. It serves as a safeguard to ensure that taxpayers pay their fair share of taxes and prevents them from exploiting loopholes or engaging in transactions primarily for tax avoidance purposes. The GAAR empowers the tax authorities to disregard or re-characterize transactions that are deemed to lack economic substance or are contrary to the object and purpose of the tax laws. It applies to all taxes administered by the Ghana Revenue Authority (GRA) and helps maintain the integrity and effectiveness of the tax system by deterring tax avoidance practices. Compliance with the GAAR requires taxpayers to undertake genuine commercial transactions and ensure that their tax planning arrangements are not primarily aimed at avoiding taxes.

Digital services tax and Other significant anti-avoidance legislation: Digital Services Tax (DST): The DST is a tax specifically targeting digital services provided by non-resident entities to customers in Ghana. It aims to ensure that multinational digital companies operating in Ghana contribute their fair share of tax on income generated from digital services. The DST typically applies to online advertising, digital content streaming, e-commerce transactions, and other digital services. Non-resident entities providing these services are required to register for DST and comply with the relevant tax obligations.

Thin Capitalization Rules: Thin capitalization rules limit the deductibility of interest expenses on loans from related parties where the borrower’s debt-to-equity ratio exceeds a specified threshold. These rules prevent multinational companies from excessively leveraging their Ghanaian subsidiaries with debt to reduce taxable profits through interest deductions. By limiting interest deductions, thin capitalization rules help prevent erosion of the tax base and ensure that companies contribute their fair share of tax in Ghana. Controlled Foreign Company (CFC) Rules: CFC rules are designed to prevent taxpayers from artificially shifting profits to low-tax jurisdictions by controlling foreign entities.

These rules allow the taxation of passive income earned by foreign subsidiaries or controlled entities in low-tax jurisdictions, regardless of whether the income is distributed to the Ghanaian parent company. CFC rules help combat profit shifting and tax avoidance by ensuring that income earned by foreign entities controlled by Ghanaian taxpayers is subject to tax in Ghana.

Value-added tax/Goods and services tax

Type of tax: VAT is a consumption tax levied on the value added to goods and services at each stage of the supply chain. Registered businesses collect VAT on their sales and remit it to the government, while also reclaiming VAT paid on their purchases as input tax credits. VAT applies to a wide range of goods and services, including imports, domestic sales, and certain exempt or zero-rated items.

Standard rate: 15%

Reduced rates: a) Valued Added Tax is made up as follows: • GETFUND Levy : 2.5% • NATIONAL HEALTH INSURANCE Levy : 2.5% • COVID-19 HEALTH RECOVERY Levy : 1.0% • VALUED ADDED TAX RATE : 15%

Registration: To register for Value-Added Tax (VAT) in Ghana, businesses meeting the taxable supplies threshold must complete and submit a VAT registration form to the Ghana Revenue Authority (GRA). This form requires accurate business details and supporting documents, such as a Taxpayer Identification Number (TIN), business registration certificate, and identification documents of directors or owners. After submission, the GRA reviews the application, and if approved, issues a VAT registration certificate. Once registered, businesses must comply with VAT regulations, including charging VAT on taxable supplies, filing returns, and remitting VAT to the GRA. Ensuring timely and accurate compliance is crucial to avoid penalties.

Filing and payment: Taxpayers are to file their returns and make payments by the last working day of each month immediately following the month to which the returns relate. For example, October returns must be submitted by the last working day in November. If payment is due on the returns submitted, it must be made not later than the date the return is submitted. The return must be on the form prescribed by the Commissioner General. Copies of the tax returns form can be downloaded from www.gra.gov.gh. The following returns will be submitted by the VAT registered taxpayer • VAT returns for standard rates supplies • VAT flat rate scheme (VFRS) Returns for (VFRS Taxpayer only) • NHIL, GETFund, and COVID-19 HRL Returns.

Social security contributions

Worker – 5.5% of workers’ basic salary
Employer – 13% workers’ basic salary
Total – 18.5% of workers’ basic salary

Self-employed

The breakdown of the contribution rate is as follows: Self-employed individuals contribute 13.0% of their declared monthly income as the employer’s portion. Self-employed individuals also contribute 5.5% of their declared monthly income as the employee’s portion.

Other taxes

Capital duty: Upon incorporation of a company in Ghana, the stated capital of the company attracts a capital duty of 1% on the amount of the total stated capital. This duty also applies to any subsequent increase in the stated capital. Conversely, if a company reduces its capital and makes a profit, it will be taxed on that profit

Immovable property taxes: In Ghana, immovable property taxes are governed by the Local Governance Act, 2016 (Act 936). Popularly known as Property Rate. The property rate is imposed on immovable structures such as houses, apartments, estates, malls, skyscraper shops, and any other immovable property. It is calculated by the Metropolitan, Municipal, and District Assemblies (MMDAs). The assessment process involves determining the rateable value of the property. The property rate charged for a given property in any given year is the product of the rateable value and the rate impost (Property Rate Charged = Rateable Value × Rate Impost). The rate varies based on the classification of the area (1st Class, 2nd Class, 3rd Class) and the purpose of property use (Commercial, Residential, or Mixed use

Transfer tax: Transfer tax rates in Ghana can vary depending on the type of transaction and the value of the property or assets transferred. However, specific tax rates for transfer taxes may include: Real Estate Transfer Tax: The tax rate for real estate transfer tax in Ghana is typically around 5% to 6% of the value of the property transferred. However, this rate may vary depending on factors such as the location and nature of the property. Securities Transfer Tax: The tax rate for securities transfer tax in Ghana is usually around 1% to 1.5% of the value of the securities transferred. This rate may also vary depending on the type of securities and the specific regulations governing the transaction.

Stamp duty: Stamp Duty is paid at rates ranging between 0.25% to 1% and Gh¢ 0.05 to Gh¢ 25, depending on the type of transaction and the Instrument. A Stamp duty of 1% applies on the initial Stated Capital and any subsequent increase in Stated Capital.

Net wealth/worth tax: In Ghana, there is no specific net wealth or net worth tax. All the other Individual and Corporate Taxes above are appicable

Inheritance/gift taxes: A gift received by an individual is included in the Assessable Income of the Individual and taxed at rate of 25% (for non-resident) or the highest marginal rate of 35% (for resident). Gifts from Business, is at a graduated rate that is added to the person’s income from employment or business for the year of assessment. The tax payable on Gift from Investment is 15% for a resident Ghanaian and 25% for a non-resident Ghanaian.

Other: A Communication Service Tax of 5% is charged only by electronic communications services providers who have been classified as such by the National Communication Authority.

Tax treaties

The Government of Ghana (GOG) has entered into Double Tax Agreements with the following counties: Belgium, Denmark, France, Germany, Italy, Mauritius, Netherlands, Singapore, South Africa, United Kingdom, Switzerland. Government of Ghana has signed Double Tax Treaties (DTTs) with the following counties, but they are not yet in force: Ireland, Malta, Morocco, Norway, Qatar and United Arab Emirates.The Government is also pursuing DTTs with various countries including Nigeria, Saudi Arabia, Sweden, Syria and the United States.