GhanaTax Obligations Detailed

Employers in Ghana have various tax obligations, including payroll taxes, social security contributions, and annual tax filings.

Employer Taxes and Contributions

• Pay As You Earn (PAYE): Employers withhold PAYE tax from employee salaries monthly based on a progressive tax system. The highest rate is 35% for residents and a flat rate of 25% for non-residents. Tax is due by the 15th of the following month.
• Social Security and National Insurance Trust (SSNIT): Employers contribute 13% of the employee's salary to SSNIT, while employees contribute 5.5%, totaling 18.5%.
• National Health Insurance Levy (NHIL): 2.5% levy on the supply of goods and services.
• Ghana Education Trust Fund Levy (GETFL): 2.5% levy on the supply of goods and services.
• COVID-19 Health Recovery Levy (CHRL): 1% on goods and services.

Filing Requirements

• Monthly PAYE Returns: Due by the 15th of the following month.
• Annual Tax Returns: Employers must file an annual income tax return for each employee by March 31st of the following year.
• Annual Employer Deduction Schedule: Due by April 30th, detailing employee remuneration, taxes deducted, and benefits.

Additional Considerations

• Overtime Tax: If overtime pay doesn't exceed 50% of the monthly basic salary, a 5% tax is applied. Overtime exceeding 50% is taxed at 10% on the excess amount. For non-resident employees the rate is flat 20%.
• Minimum Wage: The daily minimum wage in Ghana is 18.15 GHS as of January 1st, 2025.

This information is current as of February 5th, 2025 and may be subject to change. Consulting with a tax professional is recommended for the most accurate and up-to-date information.

Employee tax deductions in Ghana are managed through the Pay-As-You-Earn (PAYE) system, where employers deduct taxes directly from employee salaries and remit them to the Ghana Revenue Authority (GRA).

Taxable Income

• Taxable income encompasses all earnings from employment, including salaries, wages, bonuses, commissions, allowances, and benefits-in-kind (such as company-provided accommodation or vehicles).

Deductions

• Social Security and National Insurance Trust (SSNIT): 5.5% of the employee's basic salary is deducted for SSNIT contributions.
• Provident Fund: Contributions of up to 16.5% of the basic salary can be deducted, paid by either the employer, employee, or both.
• Mortgage Interest: Interest paid on one residential property (only once during an employee's lifetime) can be deducted.
• Charitable Contributions: Donations to approved worthwhile causes are deductible.

Tax Rates and Reliefs

As of 2025, Ghana's PAYE tax rates are progressive, increasing with income levels. Here is a simplified general representation. Keep in mind that tax laws are complex and change frequently. | Annual Band (GHS) | Monthly Band (GHS) | Tax Rate (%) | |-------------------|-------------------|-------------| | First 5,880 | First 490 | 0 | | Next 1,320 | Next 110 | 5 | | Next 1,560 | Next 130 | 10 | | Next 38,000 | Next 3,166.67 | 17.5 | | Next 192,000 | Next 16,000 | 25 | | Next 366,240 | Next 30,520 | 30 | | Above 605,000 | Above 50,416.67 | 35 |

• Taxpayers are also eligible for several reliefs, including those for dependent spouses, children, aged dependents, disability, and professional training costs.

Employer Responsibilities

• Employers must deduct PAYE taxes, SSNIT contributions, and other applicable deductions from employee salaries each month.
• These deductions should be remitted to the GRA by the 15th of the following month.
• Employers are also required to file annual returns detailing employee income and deductions by April 30th of the following year.

Employee Responsibilities

• Employees are responsible for filing their annual income tax returns with the GRA by April 30th of the following year.
• They must obtain a Tax Identification Number (TIN) if they don't already have one.

Penalties

• Penalties apply for non-compliance with tax regulations, including late payments and inaccurate filings.

It is important to consult the GRA or a tax professional for the most up-to-date and comprehensive information regarding employee tax deductions in Ghana. This information is current as of February 5, 2025, and may be subject to change.

In Ghana, the Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production and distribution.

VAT Rates and Registration

• Standard VAT Rate: 15%
• National Health Insurance Levy (NHIL): 2.5%
• Ghana Education Trust Fund Levy (GETFund): 2.5%
• COVID-19 Health Recovery Levy (COVID-19 HRL): 1%
• VAT Flat Rate Scheme (VFRS): 3% for retailers with annual turnover between GHS 200,000 and GHS 500,000. This includes the 1% COVID-19 HRL.
• Immovable Property (Rental/Estate Developers): 5%

VAT Registration Threshold:

• Mandatory registration if taxable supplies exceed GHS 200,000 over a 12-month period or GHS 50,000 over a three-month period. Voluntary registration is also possible. Non-resident suppliers of electronic commerce and telecommunication services are subject to the same threshold.

Filing and Payment

• Deadlines: VAT returns and payments are due by the last working day of the month following the reporting period.
• Certified Invoicing System (CIS): Taxpayers are required to issue tax invoices through the CIS, which necessitates integration with the Ghana Revenue Authority (GRA) systems. The second phase of the e-VAT system is being rolled out to include larger and medium taxpayers as of December 2023. As of the 2024 budget, certified invoices are the basis for deductible expenses for income tax purposes.

Exempt Goods and Services

A summary of goods and services exempt from VAT/NHIL/GETFund (though may still be subject to COVID-19 HRL):

• Live animals (excluding horses, donkeys, mules, and similar exotic animals)
• Goods designed exclusively for use by the disabled
• Educational services provided by approved institutions
• Medical supplies and services, including pharmaceuticals
• Transportation services
• Specified machinery
• Crude oil and hydrocarbon products
• Land, building, and construction

It is important to note: goods previously exempt, such as imported textbooks, newspapers, periodicals, and certain printed matter are no longer exempt as of January 2023. Betting, gaming, and games of chance have also been removed from the scope of VAT.

Additional Information for Businesses

• Withholding Tax: The GRA appoints VAT-registered withholding agents to withhold 7% of the taxable value of goods and services for supplies subject to the standard 15% VAT rate.
• Non-Resident Employees: A flat rate of 25% is applicable on salaries and other emoluments of non-resident employees. Employers must remit withheld taxes by the 15th of the following month.
• Tax Estimates: Medium and large taxpayers must revise their tax estimates if there are significant changes, with due dates on June 30, September 30, and December 31.
• Zero-Rated Supplies: Locally manufactured textiles and locally assembled vehicles are zero-rated until December 2025, as per the 2024 budget.

This information is current as of February 5, 2025, and may be subject to change. It's essential to consult with a tax professional or the GRA for the most up-to-date regulations.

Ghana's tax incentive framework aims to stimulate investment, foster economic growth, and diversify the economy.

Tax Incentives

• Tax Holidays: Certain sectors, like agriculture, manufacturing, and tourism, can qualify for tax holidays of up to 10 years. Agro-processing businesses typically receive a five-year tax holiday. Free Zone Enterprises enjoy a 10-year corporate tax holiday followed by a reduced rate of 15%.
• Reduced Corporate Income Tax (CIT) Rates: Businesses in regional capitals (excluding Accra and Tema) may benefit from a reduced CIT rate of 20% (compared to the standard 25%). Rural businesses can qualify for even lower rates, with those in less-developed areas potentially enjoying a 10% rate. Companies listed on the Ghana Stock Exchange are taxed at 22%. Companies involved in the export of non-traditional goods are taxed at a reduced rate of 8%.
• Customs Duty Exemptions: Exemptions from import duties are available for machinery, equipment, and raw materials imported for production, particularly in manufacturing, agriculture, and renewable energy.
• VAT Exemptions: Certain sectors, such as agriculture and education, may be exempt from VAT on imported goods. The supply of locally manufactured textiles and assembled vehicles (under the Ghana Automotive Development Programme), as well as locally manufactured sanitary towels, is zero-rated.

Sector-Specific Incentives

• Agriculture: Five-year tax holidays for agro-processing, tax rebates for livestock, fish, and poultry farming. Tree crop farmers benefit from a 10-year tax exemption from the first harvest, while cash crop farmers receive a 5-year exemption.
• Manufacturing: Reduced corporate tax rates and duty exemptions on raw materials and machinery.
• Tourism: Tax holidays and customs duty exemptions.
• Export-Oriented Businesses: Incentives for companies exporting a significant portion of their output (generally at least 70%). Companies registered as free zone developers/enterprises do not pay CIT for the first ten years of operation.
• "One District, One Factory" (1D1F) Initiative: Incentives to promote industrial growth across various districts, stimulating investment and job creation.
• Ghana Automotive Development Programme: Incentives for local vehicle manufacturers and assemblers, including a zero-rate concession on the supply of locally assembled vehicles until December 31, 2025.

Additional Incentives

• Free Zones: Businesses operating within designated Free Zones benefit from tax holidays, exemptions from import and export duties, and unrestricted repatriation of capital and profits.
• Venture Capital: Tax benefits for venture capital investments, including reduced tax rates on interest and dividends.

Application Procedures and Eligibility

Specific eligibility criteria and application procedures vary depending on the incentive. Detailed information can be obtained from the Ghana Investment Promotion Centre (GIPC), which is the primary authority for managing investment incentives, or other relevant government bodies. Tax incentives are granted by Parliament, upon the advice of the Minister for Finance.

Personal Tax Relief

Resident individuals are eligible for personal tax relief to reduce their tax burden. Specific relief is dependent on individual circumstances and applications can be made through the Ghana Revenue Authority (GRA). Resident individuals are taxed on their worldwide income, including foreign-sourced income, unless specific exemptions apply (e.g., employment income earned outside Ghana under certain conditions). Residents paying foreign taxes to countries with Double Taxation Agreements (DTAs) with Ghana may claim tax credits, subject to limitations.

General Tax Information

Ghana's tax system includes Corporate Income Tax (CIT), Value Added Tax (VAT), and personal income tax. The standard CIT rate is 25%, with lower rates available for specific sectors and locations. VAT is a consumption tax levied on goods and services. Tax laws and regulations are subject to change, so staying updated with current legislation is essential.