Tax collection plays an important role in the growth of Ghana’s economy which makes compliance among businesses crucial. The Ghana Revenue Authority (GRA) is responsible for administering taxes and ensuring business compliance. Below are 8 tax laws that businesses in Ghana must know and understand.
1. Corporate Income Tax (CIT)
CIT is charged on the profits made by companies operating in Ghana. The standard rate is 25%, with certain industries such as mining and petroleum charged differently. Companies must file annual tax returns within four months of the end of their accounting period.
2. Value Added Tax (VAT)
VAT is levied on the supply of goods and services imported and locally produced. The standard VAT rate in Ghana is 12.5%, with an additional National Health Insurance Levy (NHIL) of 2.5% and a GET Fund levy of 2.5%. Businesses with more than GHS 200,000 income must register for VAT with returns filed monthly and payments made by the 30th day of the next month.
3. Pay As You Earn (PAYE)
PAYE is used to collect income tax from employees. Employers are to withhold a specific amount of tax from their employees’ wages and forward it to the GRA. Employers must forward PAYE deductions to the GRA by the 15th of the next month.
4. National Insurance Contributions (Social Security)
Businesses must contribute to the Social Security and National Insurance Trust (SSNIT) on behalf of their employees. These contributions provide employees with retirement and disability benefits. Employer’s contribute 13% of their gross salary whilst employees contribute 5.5%.
5. Withholding Tax (WHT)
This is tax withheld at the source from certain payments made by businesses such as rent, dividends, and payments to contractors. It is withheld by the payer and forwarded to the GRA. It must be paid to the GRA within 15 days of the month after the transaction.
6. Capital Gains Tax (CGT)
With CGT, a 15% rate is imposed on profit made from the sale or transfer of assets such as land, buildings, and shares by a business. Transfers between spouses and close relatives may be exempted.
7. Import Duty and Customs Taxes
Businesses that import goods into Ghana are required to pay import duties and other taxes. The rates for these taxes depend on the nature of the goods, their value, and the trade agreements in place. Duties generally range from 0 to 20%. Businesses may also be required to pay the ECOWAS levy (0.5%) and the African Union Import Levy (0.2%).
8. Stamp Duty
This is a tax imposed on legal documents such as leases, contracts, and property transfers. Businesses pay this tax when entering into specific agreements or transactions and the rate varies based on the nature of the document. The tax must be paid to GRA within 28 days of the document’s execution.
Philipa N. A. Sima Nuamah on behalf of OSD & Partners
