Paying taxes might not be everyone’s favorite activity, but it’s an important way to support national development. That said, some types of income are completely tax-free under Ghana’s laws. These tax breaks often aim to boost the economy, promote social good, or encourage certain activities.
Here’s a simple look at 10 types of income you don’t need to pay taxes on in Ghana:
1. The President’s Salary
The President’s salary, allowances, and pension are completely tax-free. Supporters say this exemption recognizes the demanding nature of the role and encourages a smooth transition when the term ends.
2. Government and Local Authority Income
Government institutions and local authorities don’t pay taxes on income tied to their official activities, like fees for garbage collection. However, income from unrelated business ventures, like renting out a property, can still be taxed.
3. Cocoa Farming Earnings
Cocoa farmers don’t pay taxes on the income they earn from selling cocoa. This relief supports farmers in rural areas and recognizes cocoa’s vital role in Ghana’s economy.
4. Public Corporation Income
Public corporations set up by the Government to provide services (not for profit) don’t pay taxes on income from their core activities. However, profits from unrelated commercial ventures might still be taxable.
5. Pension Payments
Retirees don’t pay taxes on their pension benefits. This exemption helps retirees enjoy a comfortable life after years of hard work.
6. Interest Earnings
Interest earned on investments is tax-free. This encourages more people to save money and invest.
7. Student Scholarships
Scholarships, awards, or other educational aid received by students are not taxed. This means students get to keep their full scholarship amount to support their studies.
8. State-Owned Schools’ Income
Government-funded schools and universities don’t pay taxes on their income. This helps them focus their resources on providing quality education instead of worrying about taxes.
9. Compensation for Injury or Death
If someone receives a one-time payment for personal injury or as compensation after a loved one’s death, that money is tax-free. This ensures victims and families get the full support they need during tough times.
10. Diplomats’ Income
Diplomats and their missions don’t pay taxes on their earnings while in Ghana. This exemption fosters good relationships between countries and allows diplomats to focus on their duties without tax concerns.
Ghana’s tax exemptions are designed to provide relief where it’s needed most, whether for farmers, students, retirees, or diplomats. Knowing what’s tax-free can help you plan better and make the most of the system while contributing to the country’s development.
Alhassan Aboagye on behalf of OSD and Partners. [email protected]
