Snapshot of taxation in Ghana

Introduction

Ghana’s tax regime is regulated by several tax legislation including the Income Tax Act 2015 (Act 896) which came into effect on January 1, 2016. Ghana has moved from the source system of taxation of residence to a worldwide system of taxation where by a resident person is liable to tax irrespective of where the income is made and whether the source has ceased.  A non-resident person who is present in Ghana in a year for an aggregate period of 183 days or more is deemed a resident person and liable to tax in the same manner as a resident person.  Below is a quick look at Ghana’s current tax rates under the various tax laws as at June 2017.

Taxation of Individuals

Resident employees and self-employed persons are required to pay income tax at graduated rates in four equal installments. Non-resident individuals are liable to tax on income earned in Ghana. The current personal income tax rates are:

  • Resident individuals 5%-20%
  • Non-resident individual 20%
  • Realization of investment asset such as

Shares by an individual 15%

  • Gift other than gifts received in respect

of business or employment 15%

Taxation of Entities

The general corporate tax rate in Ghana is 25%. Other industries however, enjoy reduced corporate taxes as follows:

  • Hotel industry  22%
  • Export of non-traditional goods 8%
  • Financial Institutions-

         Income from Loan to Farming

         Enterprises/Lease Company 20%

  • Manufacturing industries located in:

         All other regional capitals except

         Accra and Tema   18.75%

          Located outside regional capitals  12.50%

Companies engaged in petroleum and mining operations pay tax at the rate of 35%

Exempt Income

The following business incomes are exempt from tax:

  • Income from cocoa of a cocoa farmer;
  • Income of an approved charitable organisation;
  • Income of a club, trade association or similar institution;
  • Income of a statutory building society or a registered building society, or a statutory friendly society or a registered friendly society;
  • Income of a non-resident person from a business of operating ships or aircrafts, where an equivalent exemption is granted by the country of residence of that person to persons resident in this country; and

Gains

       Tax Concessions

Certain businesses conducted wholly in Ghana are granted tax concessions. These entities enjoy a reduced corporate tax rate of 1% during the stipulated tax concession. Entities entitled to tax concessions include:

  • Tree crop farming  10 years
  • Cash crop or livestock farming  5 years
  • Cattle rearing 10 years
  • Agro processing business   5 years
  • Cocoa by product business 5 years
  • Rural banking business   10 years
  • Waste processing business   7 years
  • Letting or sale of low cost affordable residential premises   5 years
  • Approved unit trust scheme and mutual fund   10 years
  • Venture capital financing company   10 years
  • Withholding Taxes for Resident Persons

A resident person who makes payment of any of the items listed below to another resident person is required to withhold tax at the prescribed rate and pay same to the Ghana Revenue Authority (GRA) as follows:

  • Interest (excluding individuals and resident financial institutions)    8%
  • Dividends    8%
  • Rent of residential property paid to an entity 8%
  • Rent of non-residential property   15%
  • Fees, allowance to resident director / manager,

 board member, trustee   20%

  • Fees to lecturers, invigilators, examiners,

part time teachers, non-executive directors / board members   10%

  • Supply of goods exceeding GHȻ2,000    3%
  • Supply of works exceeding GHȻ2,000 5%
  • Supply of services exceeding GHȻ2,000    5%

Lottery winnings     5%-15%

Withholding Taxes for Resident Persons

Non-resident persons are subject to tax to be withheld at the prescribed rates on incomes earned from activities in Ghana.  These include:

  • Income from employment   20%
  • Dividend   8%
  • Royalties, natural resources payments and rents 15%
  • Management, consulting and technical service

fee and endorsement    20%

  • Repatriated Branch after tax profits  8%
  • Interest   8%
  • Short term insurance premium   5%
  • Endorsement fees    20%
  • Payment of services   20%
  • Supply of goods, works and services   20%
  • Petroleum sub-contractor   15%
  • Transport business including

renting containers and related equipment other than transshipment:      15%

  • Communication business by an apparatus located in the country, whether or not the messages originate, terminate or are used in the country   15%

Other Taxes

  • VAT     15%
  • VAT flat rate for traders operating In the retail sector  3%
  • National Health Insurance Levy     5%
  • Import Duty   0%-35%
  • Excise Duty   0%-170.65%
  • Special Petroleum Tax     15%
  • Special Import Levy  2%
  • National Electrification Scheme Levy  3%
  • Public Lightening Levy  2%
  • Stamp duty  5 – 0.5%
  • Mineral royalties  5 %
  • Capital Gains Tax/ Gains obtained from the realisation of capital or investment assets must be included in the assessable income of the tax payer                              25%

GHANA’S DOUBLE TAXATION AGREEMENTS AND RATES

No. DTA Date of signature Rates of tax  under DTA
1. Ghana and United Kingdom Signed –

January 20, 1993

 

Ratified- August 10, 1994

a.       Dividends (where recipient holds at least 10% shares)   7.5%

 

b.       Dividends (in any other case)     15%

 

c.       Royalties                          12.5%

 

d.       Technical/

Management

Services fees                                 10%

e.       interest                                                                                                                                 12.5%

2. Ghana and South Africa Signed -November 2, 2004

 

Ratified –May 18, 2007

a.       Dividends (where recipient holds at least 10% shares)

5%

b.       Dividends (in any other case)  15%

c.       Royalties

10%

 

d.       Technical/

Management services fees

10%

e.       interest

10% (5% for banks)

3. Ghana and Switzerland Signed:  June 23, 2008

 

Effective: December 30, 2009

a.       Dividends (where recipient holds at least 10% shares)  5%

 

b.       Dividends (in any other case)

15%

 

c.       Royalties

8%

 

d.       Technical/

Management

services fees

8%

 

e.       interest

10%

 

4. Ghana and Italy Sinned:

February 19, 2004

 

Effective: January 1, 2007

 

 

a.       Dividends (where recipient holds at least 10% shares) 5%

 

b.       Dividends (in any other case) 15%

 

c.       Royalties10%

 

d.       Technical/

Management

services fees

10%

 

e.       interest

10%

 

5. Ghana and Netherlands Signed: March 10, 2008 a.       Dividends (where recipient holds at least 10% shares) 5%

 

b.       Dividends (in any other case)

10%

 

c.       Royalties

8%

 

d.       Technical/

Management services fees 8%

 

e.       interest

8%

6. Ghana and France Signed: April 5, 1993

 

In Force: April 1, 1997

 

Effective: January 1, 1998

a.       Dividends (where recipient holds at least 10% shares) 7.5%

 

b.       Dividends (in any other case)

15%

 

c.       Royalties

10%

 

d.       Technical/

Management services fees 10%

 

e.       interest

10%

7. Ghana and Germany Signed: August 12, 2004

 

In Force: December 14, 2007

 

Effective: January 1, 2008.

a.       Dividends (where recipient holds at least 10% shares) 5%

 

b.       Dividends (in any other case)

15%

 

c.       Royalties

8%

 

d.       Technical/

Management services fees 8%

 

e.       interest

10%

8. Ghana and Belgium Signed: June 22, 2005

 

In Force: October 17, 2008

 

Effective: January 1, 2009

a.       Dividends (where recipient holds at least 10% shares) 5%

 

b.       Dividends (in any other case) 15%

 

c.       Royalties 10%

 

d.       Technical/

Management services fees 10%

 

e.       interest

10%