NAVIGATING TAXATION 2020 GHANA TAX FACTS AND FIGURES - SEPTEMBER 2020 - PWC
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Navigating taxation
2020 Ghana Tax Facts and Figures
September 2020
www.pwc.com/gh
Introduction
In this publication, all currency references are
in Ghana Cedi (GH¢), which was
approximately US$0.18 as at 31 August 2020.
Although we have taken all reasonable This guide has been prepared for
care in compiling this publication, quick reference, and action should
we do not accept responsibility for any not be taken on the strength of the
errors or inaccuracies that it information contained herein without
may contain. obtaining professional advice.
Office locations in Ghana
Accra office Takoradi office Sierra Leone office
PwC Tower No. 13, GK Ntow Street Number 117 Jomo
Plot no. A4 Rangoon Lane, South Chapel Hill Kenyatta Road
Cantonments City Takoradi – Ghana
Telephone:
PMB CT 42 Cantonments
+232 (0) 78361701
Accra – Ghana Telephone:
+233 (0) 312028416
Facsimile:
Telephone: +233 (0) 312028410
+233 (0) 302761500 Facsimile:
+233 (0) 312028410
Email:
Facsimile: pwc.ghana@gh.pwc.com
+233 (0) 302761544 Email:
pwc.ghana@gh.pwc.com
Website:
Email: www.pwc.com/gh
pwc.ghana@gh.pwc.com Website:
www.pwc.com/gh
Website:
www.pwc.com/gh
PwC
A brief profile of PwC
About us – Global PwC Ghana
overview We offer professional services to both
PwC firms provide industry-focused the private and public sectors in the
assurance, tax and advisory services following industries:
to enhance value for our clients.
We’re a network of firms in • Consumer and industrial products
157 countries with more than and services
276,000 people who are committed • Energy, utilities and resources
to delivering quality in assurance,
advisory and tax services. • Financial services
• Government and public sector
Our global values (including donor agencies and
NGOs)
We are driven by our global values of
Act with integrity, Make a difference, PwC Ghana is a member firm of
Care, Work together and Reimagine PricewaterhouseCoopers International
the possible. We strive to deliver what Limited, each member firm of which
we promise, work together as a team, is a separate legal entity. Ghana is an
and become a more purpose-led and established market with high levels
values-driven firm. of economic activity and very good
growth prospects. PwC Ghana is
In Africa, PwC is the largest provider located in Accra and Takoradi, with a
of professional services, with close to branch office in Sierra Leone, and has
400 partners and over 9,000 people over 300 employees and 13 resident
located in 34 countries. This enables partners/directors.
us to provide clients with seamless
and consistent service, wherever they
are located on the continent.
Navigating taxation – 2020 Ghana Tax Facts and FiguresAudit and Assurance Services Our risk assurance services consist
of a portfolio of inter-related solutions
Our audit approach is tailored developed around the themes of
to suit the size and nature of your risk, controls and assurance, and
organisation and draws upon our use skills and competencies that are
extensive industry knowledge. fundamental to the delivery of a
As leaders in the development of high-quality financial audit.
non-financial performance reporting,
we help our clients respond to the The risk assurance services we offer
need for greater transparency, manage the following four areas of risk:
improved corporate governance
and business models based on • Financial/Commercial;
the principle of sustainability.
Every engagement is considered • Operational;
unique and is executed to ensure • Organisational; and
value creation. We assist shareholders
and other stakeholders by providing an • Compliance/Regulatory.
independent opinion and reports that
add credibility to financial information.
We assist audit committees in
discharging their corporate governance
and compliance responsibilities. We
provide clearance to group auditors
so that they are able to meet group
reporting requirements. And we assist
management by providing observation
and advice on financial reporting and
business issues.
PwCTax and company secretarial Advisory services
services We help organisations to work smarter
PwC is the leading provider of tax and grow faster. We consult with our
services worldwide. We understand clients to build effective organisations,
your business and economic innovate and grow, reduce costs,
environment and we combine this manage risk and regulation and
with specialist tax knowledge to leverage talent. Our aim is to support
help you navigate complexity. you in designing, managing and
We provide services in the areas executing lasting beneficial change.
of direct tax, indirect taxes, transfer We offer services in the following
pricing, international tax and mergers areas:
and acquisitions, tax reporting and
strategy, people and organisation and • transaction;
company secretarial and immigration • business recovery;
services.
• people and change;
As regards to accounting, we assist • forensics and investigative;
with
• finance and accounting; and
• preparing the monthly cash book; • strategy and operations.
• recording monthly bank
transactions; Sustainability and climate
• keeping other subsidiary ledgers; change services
and Organisations today operate in a
• preparing the trial balance income complex environment with growing
statement and balance sheet. pressures from many angles.
These include the need for
transparency from stakeholders;
consumer pressure (licence to
operate); growing and changing
risks to business models and supply
chains; and increased competition for
efficiency and growth opportunities
attained through access to new
products and markets.
Navigating taxation – 2020 Ghana Tax Facts and FiguresPwC Ghana Business
Our sustainability experts help our
School
clients in defining their sustainability For PwC, developing people and
strategy, advising on policy, sharing knowledge are central to how
operational change, risk management, we do business. We believe it is pivotal
reporting, monitoring and assuring to the achievement of growth in our
their progress – all through a firm, our clients’ businesses, industries
sustainability lens. We help our clients and the broader economy.
integrate environmental, social and
governance issues into their operations PwC’s Business School is not
and embrace the challenges of today’s a traditional learning institution.
business environment as opportunities Due to our deep experience in our
for long-term and sustainable growth. industry and our knowledge of our
clients and the industries in which
they operate, we are subject matter
experts in a variety of areas. PwC’s
Business School is therefore focused
on delivering relevant learning and
development solutions based on this
knowledge, as well as offering public
courses on selected topics and a wide
range of bespoke training solutions
tailored to the needs and capacity
of organisations.
For more information on the Business
School please visit our website:
https://www.pwc.com/gh/en/about-us/
business-school.html
PwCResident Partners/Directors Vish Ashiagbor Edward Gomado Country Senior Partner Assurance vish.ashiagbor@pwc.com edward.gomado@pwc.com Michael Asiedu-Antwi Ayesha Bedwei Assurance Leader Tax michael.asiedu-antwi@pwc.com ayesha.a.bedwei@pwc.com George O Kwatia Nelson Opoku Tax Leader Internal Firm Services george.kwatia@pwc.com nelson.b.opoku@pwc.com Eric Nipah Abeku Gyan-Quansah Advisory Leader Tax eric.nipah@pwc.com abeku.gyan-quansah@pwc.com Oseini Amui Hayfron Aboagye Assurance Assurance oseini.x.amui@pwc.com hayfron.aboagye@pwc.com Maxwell A Darkwa Kingsley Owusu-Ewli Assurance Tax maxwell.a.darkwa@pwc.com kingsley.owusu-ewli@pwc.com George K Arhin Assurance and Business School george.arhin@pwc.com Navigating taxation – 2020 Ghana Tax Facts and Figures
Table of contents
PwCIntroduction Life insurance business 11
Taxation of retirement funds 11
A brief profile of PwC
Payments sourced from Ghana 11
Direct taxation 1 Income attributable to a permanent
Income liable to tax 1 establishment 12
Resident persons 1 Branch profit tax 12
Income sources 1 Relief from double taxation 12
Taxation of individuals 2 Double tax treaties 12
Monthly tax rates 2 Treaty tax rates 13
Income from employment 2 Withholding tax under domestic tax laws 14
Personal relief 2 Exempt income 15
Contributions to retirement benefit Anti-avoidance schemes –
schemes 2 Income splitting 15
Interest incurred by an individual on Transfer pricing 15
residential premises 3 Thin capitalisation 16
Non-cash benefits 3 Administrative procedures – Furnishing
Taxation of loan benefits 4 of returns of income 16
Non-taxable benefits/income 4 Cases where a return is not required 16
Taxation of overtime and bonus 4 Statement of estimated tax payable 16
Payment to temporary and casual Payment of tax 16
workers 4 Offences and penalties 17
Pay-as-you-earn 5
Indirect taxation 18
Employer returns 5
Value Added Tax, National Health
Modified taxation 5
Insurance Levy & Ghana Education
Year of assessment (individuals and
Trust Fund Levy 18
partnerships) 5
Scope 18
Corporate tax 6
Standard (invoice credit) scheme 19
Rates of tax 6
Group registration 19
Year of assessment (companies) 6
Tax representative 19
Basis period 6
Exempt supplies 19
Deductions allowed 6
VAT, NHIL and GETFL incurred 20
Deductions not allowed 6
VAT flat rate scheme 20
Capital allowances 6
Withholding of VAT 21
Carry-over of tax losses 7
Returns 21
Mineral royalties 7
Refunds 21
Ring-fencing of financial institutions,
Penalties 21
petroleum and mineral operations 8
Fiscal Electronic Devices 22
Dividends 8
Communication service tax 22
National Fiscal Stabilisation Levy 8
Special petroleum tax 23
Free-zone developers/enterprises 8
Customs and excise taxes 23
Young entrepreneurs 8
Import duties 24
Private universities 8
Special import levy 24
Manufacturers and assemblers of
African Union import levy 24
automobiles 9
ECOWAS levy 24
Taxation of gifts 9
Export and Import levy 24
Realisation of assets and liabilities 9
Import duty exemptions 24
Telecommunications and transportation
Administrative charges 24
business 9
Advance Eco levy 25
Change in control 10
Export duties 25
Taxation of banking business 10
Excise duties 25
Taxation of insurance companies –
Excise tax stamp 25
General business 10
Environmental tax 25
Withholding tax on premium payments 10
Airport tax 25
Navigating taxation – 2020 Ghana Tax Facts and FiguresDirect taxation
Income liable to tax A partnership is resident for a year if
any of the partners resided in Ghana
In Ghana, income tax is levied in at any time during that year.
each year on the income of both
resident and non-resident persons. A company is resident if it is
incorporated under the Companies
Resident persons are taxed on Act, 2019 (Act 992), or management
their worldwide income while and control of the company is
non-resident persons are taxed exercised in Ghana at any time
on income which has a source in during the year.
Ghana. Generally, income has a
source in Ghana if it accrues in A Ghanaian permanent
or is derived from Ghana. establishment is treated as a
resident company for the purposes
Resident persons of income taxation.
An individual is resident for tax
Persons not meeting the above
purposes if that individual is:
criteria are non-resident persons.
• present in Ghana for an
aggregate period of 183 days or Income sources
more in any 12-month period that The chargeable income of a person
commences or ends during the for any year is the total of that
year; person’s income for the year from
• a citizen who is temporarily each business, employment, and
absent from Ghana for a period investment less the total amount of
of not more than 365 continuous deduction allowed to that person.
days where that citizen has a
permanent home in Ghana; or
• an employee of the Government
of Ghana who has been posted
abroad.
PwC | 1Taxation of individuals
Monthly tax rates
The table below indicates the new monthly income tax bands and rates
generally applicable to the chargeable income of resident individuals:
Year Chargeable Rate Tax Cumulative Cumulative
2020 income % payable income tax
GH¢ GH¢ GH¢ GH¢
First 319.00 0 0 319.00 0
Next 100.00 5 5.00 419.00 5.00
Next 120.00 10 12.00 539.00 17.00
Next 3 000.00 17.5 525.00 3 539.00 542.00
Next 16 461.00 25 4 115.25 20 000.00 4 657.25
Exceeding 20 000.00 30
The chargeable income of non-resident individuals is generally taxed at a
flat rate of 25%.
Income from employment Contributions to retirement
An individual’s income from benefit schemes
employment for a calendar year Statutory contributions towards
is the gains and profits of that retirement are categorised under
individual from the employment for a three-tier scheme, as follows:
that year or a part of the year.
• First tier – A mandatory basic
Personal relief social security scheme;
Personal relief ranging from • Second tier – A mandatory fully
GH¢600 to GH¢2,000 (per category) funded and privately managed
is available to individuals who meet occupational pension scheme;
the qualifying criteria. Individuals and
with disabilities are also entitled
to 25% of their non-investment • Third tier – A voluntary fully
assessable income as personal funded and privately managed
relief. provident fund and personal
pension scheme.
2 | Navigating taxation – 2020 Ghana Tax Facts and FiguresThe general mandatory monthly Interest incurred by an
pension contribution rates are as individual on residential
follows: premises
• For employers: 13% of the Mortgage interest incurred by an
employee’s salary; and individual on a loan employed in the
construction or acquisition of one
• For employees: 5.5% of the residential premises may be claimed
employee’s salary. as a deduction against the income
of that individual.
The employer is responsible for
remitting the total mandatory
Non-cash benefits
contributions within 14 days from
the end of the month in which the Except where specifically exempt
deduction is expected to have or otherwise stated, non-cash
been made. The contributions are benefits received from employment
remitted to the Social Security and are recognised at market value and
National Insurance Trust (SSNIT) taxed.
and an approved trustee, as
appropriate. Accommodation facilities and
vehicle-related benefits are
Exemption from tax is available specifically provided for and valued
for contributions made to the as follows:
mandatory and voluntary pension
schemes.
Facility provided 2020
Provision of accommodation Value (% of TCE)
Accommodation with furnishing 10%
Accommodation only 7.5%
Furnishing only 2.5%
Shared accommodation 2.5%
Provision of means of transport Value (% of TCE)
Fuelled vehicle with driver 12.5% up to GH¢600 per month
Vehicle with fuel 10% up to GH¢500 per month
Vehicle only 5% up to GH¢250 per month
Fuel only 5% up to GH¢250 per month
PwC | 3Taxation of loan benefits • Redundancy pay;
Interest on concessionary loans • Pension;
granted by an employer to an • Capital sum paid to a person
employee may be deemed as a as compensation or gratuity for
taxable benefit. personal injury suffered by that
person or because of the death
Non-taxable benefits/income of another person;
The following benefits and income • Interest paid to an individual by a
are generally not taxable: resident financial institution or on
bonds issued by the Government
• A discharge or reimbursement of of Ghana; or
proper business costs incurred
on behalf of the employer; • Interest and dividends paid
or credited to a member of an
• A discharge or reimbursement of approved unit trust or mutual
the employee’s dental, medical, fund scheme.
or health insurance expenses if
the benefit is available to each Taxation of overtime and
full-time employee on equal
terms;
bonus
Reduced income tax rates apply on
• Relocation costs for recruiting a
the taxation of overtime and bonus
non-resident individual to come
payments subject to meeting certain
and work in Ghana based on
conditions.
certain conditions;
• On-site accommodation provided Payment to temporary and
by an employer engaged timber, casual workers
mining, building, construction,
farming business or petroleum Payment to a temporary worker is
operations to employees; generally taxed using the applicable
income tax rates and bands for
• Payment made to employees individuals. Payment to a casual
on a non-discriminatory basis worker is subject to 5% final
which by reason of the size, type withholding tax.
and frequency of the payment is
unreasonable or administratively
impracticable for the employer
to account for or allocate to an
individual;
4 | Navigating taxation – 2020 Ghana Tax Facts and FiguresPay-as-you-earn
Pay-as-you-earn (PAYE) is a system
of withholding income tax from
payments made by employers to
employees.
Under the PAYE system, the
employer deducts tax from an
employee’s taxable income at
source and remits the tax to the
Ghana Revenue Authority (GRA) by
the 15th day of the month following
the month in which the deduction
was or should have been made.
Employer returns
An employer must file an Employer’s
Annual Tax Deduction Schedule
with the GRA, disclosing income
paid to and tax withheld from each
employee, within four months of the
end of the calendar year.
Modified taxation
Individuals whose only source of
income in the year is from one
business may opt to be taxed under
the presumptive tax scheme based
on instalment or turnover, subject to
certain conditions.
Year of assessment
(individuals and partnerships)
The year of assessment and
accounting period for both
individuals and partnerships are the
calendar year.
PwC | 5Corporate tax
Rates of tax Deductions allowed
Income tax rates applicable Expenses that are wholly,
to companies differ according exclusively and necessarily incurred
to industry, location and type in the production of income are
of business. The general rates allowed as a deduction for tax
applicable to entities which do not purposes.
qualify for incentives include:
Examples of allowable expenses are
as follows:
Entity/Activity 2020
Companies – general 25% • capital allowance for the year;
Companies engaged 35% • bad debts (under certain
in mining or upstream conditions);
petroleum business
• tax losses brought forward for a
specified number of years;
Year of assessment
(companies) • repairs and improvements under
certain conditions;
The year of assessment is the
calendar year. • losses incurred on the realisation
of business or investment assets
Basis period and liabilities;
The basis period of a company or • incentives for hiring recent
trust is the accounting year of the graduates; and
company or trust. • financial costs under certain
conditions.
A company or a trust may choose
a particular accounting year. Once Deductions not allowed
chosen, an accounting year cannot
be changed unless approval In general, expenses that are of
in writing is obtained from the a capital nature or not wholly,
Commissioner-General of the GRA. exclusively and necessarily incurred
in the production of income are not
deductible. Examples of expenses
that are not deductible include
domestic and excluded expenditure.
Capital allowances
6 | Navigating taxation – 2020 Ghana Tax Facts and FiguresCapital allowances
Capital allowances are granted to persons who own depreciable assets and
use those assets to produce income from business.
Capital allowances granted to a person are to be taken in the year granted and
cannot be deferred. Depreciable assets are grouped in the following classes for
the purpose of capital allowances:
Class Assets included Rate (%) Basis
1 Computers and data-handling equipment 40 Reducing
with peripheral devices balance
2 Automobiles, trailers, construction and 30 Reducing
earth-moving equipment, plant and balance
machinery used in manufacturing
Plantation capital expenditure
3 Locomotives, water transportation 20 Reducing
equipment, aircraft, office furniture and balance
fixtures
Equipment not included in another class
4 Buildings, structures and works of a 10 Straight-
permanent nature line
5 Intangible assets Over useful life
An importer or manufacturer of excisable goods shall be granted 50% capital
allowance on machinery and equipment imported for the purpose of affixing
excise tax stamps.
Carry-over of tax losses
Tax losses can be carried forward for three or five years depending on the
industry/sector of operation.
Mineral royalties
Subject to any fiscal stability agreement, the mineral royalty rate is 5% of the
total revenue earned from minerals (excluding petroleum and water) obtained
from mining operations by a holder of a mining lease, restricted mining lease or
small-scale mining licence.
PwC | 7Ring-fencing of financial • Breweries;
institutions, petroleum and • Inspection and valuation
mineral operations companies;
The chargeable income of financial • Companies providing mining
institutions, petroleum or mineral support services;
operations is calculated separately
for each financial service, petroleum • Shipping lines; and
right or mineral operation. • Maritime and airport terminal
operators.
Dividends
Generally, unless exempt or subject Free-zone developers/
to a double tax treaty, dividends enterprises
paid by a resident company are Companies registered to operate as
subject to a final withholding tax free-zone developers/enterprises
of 8%. enjoy a ten-year income tax holiday.
Once the ten-year tax holiday has
National Fiscal Stabilisation expired, the tax rate on the export
Levy of goods and services is 15%. Any
other income is taxed at 25%.
The National Fiscal Stabilisation
Levy (NFSL) is a quarterly levy
chargeable on the accounting Young entrepreneurs
profit before tax of some specified Business income of young
companies and institutions. The rate entrepreneurs operating in certain
of this levy is 5% and it is applicable industries is exempt from tax for five
from 2013 to 2024 calendar years. years. Depending on the location of
the business, the corporate income
The affected companies and tax rate is increased to up to 15%
institutions are: for the next five years and then up
to 25% thereafter. Such businesses
• Banks (excluding community and can also carry forward tax losses for
rural banks); five years.
• Non-banking financial institutions;
Private universities
• Insurance companies;
Private universities are exempted
• Telecommunications companies; from taxes if 100% of profit after tax
is ploughed back into the business.
8 | Navigating taxation – 2020 Ghana Tax Facts and FiguresManufacturers and Telecommunications and
assemblers of automobiles transportation business
Business income of registered Payments received by a person who
manufacturers and assemblers carries on a business of transmitting
of knocked-down automobiles or receiving messages by cable,
under the Ghana Automotive radio, optical fibre or satellite or
Manufacturing Development electronic communication from
Programme are exempted from tax an apparatus located in Ghana,
for a period ranging between three whether or not the messages
to ten years subject to meeting originate, terminate or are used in
certain conditions. Ghana, are liable to a withholding
tax rate of 15%.
Taxation of gifts
Similarly, payments received by
A gift received by an entity a person who conducts a business
in respect of business or an of carrying passengers, cargo,
investment is included in the mail or other movable assets that
assessable income of the entity and are embarked in Ghana (other than
taxed at the applicable corporate transhipment), including the rental
tax rate. of containers and related equipment
that are incidental or supplementary
Realisation of assets and to the transportation business, are
liabilities liable to a withholding tax rate
The gains or losses from the of 15%.
realisation of business or investment
assets and liabilities are included For a non-resident, the withholding
in the assessable income of the tax is treated as a final tax.
entity and taxed at the applicable
corporate tax rate.
PwC |PwC
9 | 9Change in control Taxation of insurance
Any change in the underlying companies – General
ownership of an entity that exceeds business
50% and takes place at any time The business of a general insurance
within a three-year period triggers company is taxed on premiums and
a number of consequences for the proceeds derived and any reserve
entity, such as: for unexpired risk deducted in the
previous period, less:
• deemed disposal of the assets
and liabilities of the entity at • Proceeds incurred;
market value and reacquisition at
the same value; and • Premium incurred under a
contract of reinsurance; and
• non-deductibility of financial
costs, losses and bad debts • Reserve for unexpired risk as at
incurred before the change. the end of the accounting year.
Taxation of banking business The corporate income tax rate is
applied to the result.
A person engaged in banking
business is required to determine Any other business activity of
income or loss from the banking a person engaged in general
business separately from any other insurance business is required to be
business activity and keep separate tracked and taxed separately.
books of account for each business.
Specific provision for a debt claim Withholding tax on premium
is deductible if the Commissioner- payments
General is satisfied that it is indeed
a bad debt. Premiums paid to a resident
insurance company under an
insurance contract are exempted
from withholding tax.
Premiums paid to a non-resident
person for insurance with a source
in Ghana attract a 5% withholding
tax.
10 | Navigating taxation – 2020 Ghana Tax Facts and FiguresLife insurance business
A person engaged in a life insurance • Interest paid by a resident person
business is required to determine (including a Ghanaian permanent
income from the life insurance establishment) or paid in relation
business separately from any other to a debt obligation secured by
business activity. real property located in Ghana;
• Payments made in respect of
The business of a life insurance
natural resources located in
company is taxed as follows:
Ghana;
• Step 1: Exclude from income • Rent paid for the use of, right to
premiums and proceeds derived. use, or forbearance from using an
asset situated in Ghana;
• Step 2: Do not deduct from
income and do not include in • Royalties paid for the use of, right
the cost of an asset or liability to use, or forbearance from using
premiums and proceeds incurred. an asset in Ghana;
• Premiums and proceeds for
The corporate income tax rate is
general insurance paid to cover
applied to the result.
risk in Ghana;
Taxation of retirement funds • Payment in respect of acquiring
a domestic asset or incurring a
Retirement contributions received domestic liability or the realisation
by a retirement fund are exempt of that asset or liability;
from tax. Retirement payments
made by the retirement fund are not • Payment made in respect of an
deductible. activity conducted or forbearance
from conducting an activity in
Payments sourced from Ghana;
Ghana • Payments for employment or
The following are some of the services rendered in Ghana,
payments considered as having regardless of the place of
been sourced from Ghana: payment; or paid by the
Government, regardless of the
• Dividends paid by a tax resident place of performance; and
company; • Any other payments brought
into or received in Ghana by a
resident person.
PwC | 11Income attributable to a Double tax treaties
permanent establishment Double tax treaties (DTTs) provide
The income and liability of a relief from the double taxation of
permanent establishment are income that accrues to residents
calculated as if the permanent of contracting states within either
establishment is separate from its of the jurisdictions covered by the
owner and arrangements between treaty. Ghana has DTTs with France,
the two are recognised. Germany, the United Kingdom,
South Africa, Italy, Belgium, the
The income of a Ghanaian Netherlands, Switzerland, Denmark,
permanent establishment is subject Singapore, Mauritius, the Czech
to tax in the same manner as a Republic*, Ireland*, Morocco* and
resident company. Malta*.
The foreign income of a foreign
permanent establishment is exempt
from tax in Ghana.
Branch profit tax
The net profit of a branch is deemed
as repatriated profits and attracts a
final withholding tax of 8%.
Relief from double taxation
A resident person (excluding a
partnership) can claim foreign tax
credit for any income tax they pay
to a foreign country in respect of
a foreign-sourced income to the
extent that the foreign-sourced
income is included in the assessable
income of that person.
12 | Navigating taxation – 2020 Ghana Tax Facts and FiguresTreaty tax rates
Tax rates applicable under the terms of these treaties are as follows:
Country/ Dividend1 Dividend2 Royalty Technical or Interest
Type of Management
income Service fee
% % % % %
France 7.5 15.0 12.5 10.0 12.5
United
7.5 15.0 12.5 10.0 12.5
Kingdom
Germany 5.0 15.0 8.0 8.0 10.0
South Africa 5.0 15.0 10.0 10.0 10.0 (5.0%
for non-
resident
banks)
Belgium 5.0 15.0 10.0 10.0 10.0
Italy 5.0 15.0 10.0 10.0 10.0
The
5.0 10.0 8.0 8.0 8.0
Netherlands
Switzerland 5.0 15.0 8.0 8.0 10.0
Denmark 5.0 15.0 8.0 8.0 8.0
Singapore 7.0 7.0 7.0 10.0 7.0
Mauritius 7.0 7.0 8.0 10.0 7.0
Czech
6.0 6.0 8.0 8.0 10.0
Republic*
Morocco* 5.0 10.0 10.0 10.0 10.0
Ireland* 7.0 7.0 8.0 10.0 7.0
Malta* 6.0 6.0 8.0 12.0 7.0
* Not yet in force
1
Dividends, where the recipient holds at least 10% or 25% of shares.
2
Dividends, in any other case.
PwC | 13Withholding tax under domestic tax laws Income Rate % Resident persons Interest (excluding individuals and resident financial institutions) 8 Dividends 8 Rent on residential properties 8 Rent on non-residential properties 15 Fees to resident individuals as invigilators, examiners and part-time teachers 10 or lecturers, and endorsement fees to individuals Fees or allowances to directors, managers, board members and trustees 20 who are resident individuals Commission to insurance, sales, canvassing and lotto agents who are 10 individuals Supply of goods exceeding GH¢2,000 per annum 3 Supply of works exceeding GH¢2,000 per annum 5 Supply of services by an entity exceeding GH¢2,000 per annum 7.5 Supply of general services by an individual 7.5 Payments to petroleum subcontractors 7.5 Payments for unprocessed precious minerals 3 Royalty, natural resource payments 15 Non-resident persons Dividends 8 Royalties, natural resources payments and rents 15 Management and technical service fees 20 Goods, works or any services 20 Repatriated branch after tax profits 8 Interest income (excluding individuals) 8 General insurance premiums 5 Income from telecommunication and transportation business 15 Payments to petroleum subcontractors 15 14 | Navigating taxation – 2020 Ghana Tax Facts and Figures
A withholding agent is required to • Income of an approved unit trust
prepare and provide the withholdee or mutual fund; and
with a withholding tax certificate
• Income of an approved Real
within 30 days of the month of
Estate Investment Trust.
deduction.
Anti-avoidance schemes –
Exempt income
Income splitting
The following types of income are
exempt from taxes: Income splitting includes transfers
of income or assets (including
• Gain from life insurance when the money) to an associate that result in
proceeds are paid by a resident the transferee receiving or enjoying
insurer; the income from that property
in order to reduce the combined
• The income of a non-resident tax liability of the transferor and
person from a business that transferee. Income splitting is not
operates ships or aircraft, if permitted under the laws of Ghana.
the Commissioner-General
is satisfied that an equivalent Transfer pricing
exemption is granted by that
person’s country of residence to Ghana’s Transfer Pricing
persons resident in Ghana; Regulations (TPRs) require that
transactions conducted between
• A dividend paid to a resident persons who are in a controlled
company by another resident relationship (e.g. parent-subsidiary,
company when the company associates, relatives, etc.) be done
receiving the dividend controls at at arm’s length. The TPRs also cover
least 25% of the voting power in transactions between an employer
the company paying the dividend. and employee.
This exemption does not apply to
certain special industries; A transaction is conducted at arm’s
• Interest or dividend on an length if the terms of the transaction
investment paid or credited to a do not differ from the terms of a
holder or member of an approved comparable transaction between
unit trust scheme or mutual fund; independent persons.
• Interest and gains realised by a The acceptable methods under the
non-resident person on bonds TPRs are similar to those contained
issued by the government of in the guidance of the Organisation
Ghana; for Economic Co-operation and
• Gains from the realisation of Development (OECD) on transfer
GSE-listed securities; pricing.
PwC | 15At the end of the year, taxpayers Cases where a return is not
who conducted business with required
other persons with whom they have
controlled relationships are required Unless the Commissioner-General
to: requests so in writing, a return shall
not be filed by:
• Complete and file annual transfer
pricing returns; and • a non-resident person who has
no tax payable for the year; or
• Should have supporting
documentation or information • a resident individual who has
on transactions with connected no tax payable on his or her
persons. chargeable income for the year.
Thin capitalisation Statement of estimated tax
payable
A company is deemed as being
thinly capitalised if the ratio of its A person who is required to directly
debt to equity is greater than 3:1. pay tax in instalment is required to
Thin capitalisation does not apply to file an estimate of tax payable for
financial institutions. the year with the Commissioner-
General by the date for payment of
Administrative procedures the first tax instalment.
– Furnishing of returns of
income Payment of tax
Tax instalment payments are
A return of income should be filed
generally due by the last day of
with the GRA within four months of
the third, sixth, ninth and twelfth
the end of each accounting period.
months of the basis period where
Subject to approval by the the accounting period is a 12-month
Commissioner-General, multiple period.
extensions may be granted to file a
Withholding tax is due 15 days after
return at a later date other than the
the end of each calendar month that
compliance due date. Extensions
a tax is withheld.
granted shall not exceed 60 days
from the date the return was
In any other case, tax is due on
originally due to be filed.
the date stated in a notice of
assessment.
16 | Navigating taxation – 2020 Ghana Tax Facts and FiguresOffences and penalties
Penalties and interests apply for
non-compliance and, in some
cases, criminal sanctions exist for
the income tax offences.
PwC | 17Indirect taxation
Value Added Tax, National Health Insurance Levy &
Ghana Education Trust Fund Levy
Scope
In Ghana, Value Added Tax (VAT), The liability for VAT, NHIL and
National Health Insurance Levy GETFL is in the case of:
(NHIL) and Ghana Education Trust
Fund Levy (GETFL) are charged on • a taxable supply, by the taxable
any supply of goods and services person making the supply;
that is a taxable supply and is made • imported goods, by the importer;
by a taxable person in the course of
its taxable activity. • an imported service, by the
receiver of the service under
A taxable activity means an activity, certain conditions; and
whether or not for a pecuniary profit, • the supply of telecommunication
carried on by a person in Ghana services or electronic commerce
or partly in Ghana that involves for use in Ghana, by the non-
the supply of goods or services to resident person making the
another person for consideration. supply or its agent.
Except for exempt goods and Except for supplies considered to
services, VAT, NHIL and GETFL are be zero-rated or subject to a flat rate
generally charged on the following: of 3% (for wholesalers and retailers
of goods), the standard rate of VAT
• the supply of goods and services is 12.5%, the NHIL is 2.5% and the
made in Ghana; and GETFL is 2.5%.
• imports of goods and services.
18 | Navigating taxation – 2020 Ghana Tax Facts and FiguresNHIL and GETFL are calculated on Group registration
the value of the taxable supply of
Group registration is possible but
the goods, services or imports, with
subject to approval of a written
VAT charged on the value of the
application by members of the
taxable supply inclusive of NHIL and
proposed group of businesses.
GETFL.
A taxable person is a person Tax representative
who is registrable for VAT and/or A taxpayer may appoint a person
who has been registered by the as his representative in dealings
Commissioner-General and issued with the GRA subject to conditions
with a certificate of registration. The approved by the Commissioner-
effective date of registration as a General.
taxable person is the date specified
on the certificate of registration Exempt supplies
or, in the case of persons who are
registrable but not yet registered for Some supplies that are specifically
VAT, from the beginning of the tax exempt are listed below:
period immediately following the
tax period in which the obligation to • Agricultural inputs;
register arose. • Water, excluding bottled or
packaged water;
Standard (invoice credit)
• Electricity within specified limits;
scheme
• Textbooks, approved
The general mandatory registration
supplementary readers,
turnover threshold for taxable
newspapers, atlases, charts,
supplies over a 12-month period is
maps and music;
GH¢200,000.
• Education services, and
laboratory and library equipment
for use in rendering such
services;
PwC | 19• Medical services and medical VAT, NHIL and GETFL
supplies; incurred
• Certain pharmaceuticals, active A VAT registered business, which
ingredients and selected inputs; principally makes taxable supplies,
• Domestic transportation; may recover up to 100% of the
VAT incurred on goods or services
• Machinery and parts of purchased for the business, subject
machinery designed for use in to meeting certain conditions.
certain specified activities; The 2.5% NHIL and the 2.5% GETFL
• Crude oil and hydrocarbon are however not recoverable as an
products; input tax deduction against output
tax.
• Accommodation in a dwelling, or
land for agricultural use and civil There is a time limit of six (6) months
engineering public works; within which to claim VAT incurred
• Goods specifically designed for on goods and services procured.
the disabled;
VAT flat rate scheme
• Financial services;
There is a flat rate scheme
• Imported plant and machinery (3% VAT) applicable to taxable
designed specifically for use in supplies made by wholesalers
the automobile industry and kits and retailers in the course of their
by an automobile manufacturer taxable activity. The scheme does
or assembler subject to meeting not cover manufacturers and service
certain conditions; and providers and does not cover the
• Management fees charged supply of any form of power, heat,
by a local fund manager for refrigeration or ventilation. All other
management of a licensed private VAT provisions apply to the flat
equity fund, venture capital fund rate scheme, except for the right
or a mutual fund. to deduct input tax. The provisions
of the NHIL and the GETFL do not,
The full list and detailed descriptions however, apply to the scheme.
of exempt items are provided in the
relevant VAT legislation.
20 | Navigating taxation – 2020 Ghana Tax Facts and FiguresWithholding of VAT VAT, NHIL and GETFL on imported
goods are paid when the associated
The Commissioner-General has
duties are paid. The return and
appointed some persons as
payment of VAT, NHIL and GETFL
VAT withholding agents. These
on imported services are due within
agents are required to withhold
21 days of the month following the
from payments for standard rated
month in which the services were
supplies 7% of the taxable output
imported.
value for VAT purposes, i.e. the
taxable value inclusive of NHIL and VAT withholding returns are filed by
GETFL, and issue a Withholding the 15th day of the following month
VAT Credit Certificate at the time of to which the returns relate and tax
payment. withheld is paid by the due date.
Returns Refunds
Registered businesses are generally Businesses can apply for VAT
required to submit monthly returns refunds in accordance with the
showing: provisions of the relevant VAT
legislation. Refund claims must
• VAT charged on supplies;
satisfy relevant conditions.
• the taxable value of supplies sold
that were exempt or relieved from Penalties
VAT;
There is a comprehensive system of
• VAT incurred on the purchase of penalties and interest payable for:
goods and services;
• the incorrect declaration of VAT,
• the net VAT payable or credit; and
NHIL and GETFL;
• NHIL and GETFL charged on
• the late submission of returns;
supplies.
• late payments; and
VAT, NHIL and GETFL returns and
• infringements of the provisions of
payment (if any) are ordinarily due
the VAT laws.
by the last working day of the month
after the month to which the returns
relate.
PwC | 21Some monetary penalties resulting from non-compliance are given in the table
below:
Offence Sanctions
Failure to register Up to twice the amount of tax on taxable
supplies until the application is filed
Failure to issue (proper) tax invoices Up to GH¢1,200, plus the higher of GH¢500
and triple the amount of tax
Late filing of VAT return GH¢500 plus an additional GH¢10 per day
Making a claim for a refund which you are Twice the original refund request, plus
not entitled to interest
Late payment of tax 125% of the Bank of Ghana monetary
policy rate, compounded monthly, and
applied to the amount outstanding
General penalty Up to three times the amount of tax
involved
Fiscal Electronic Devices Communications service tax
With the passage of the Taxation (use Communication service tax (CST)
of Fiscal Electronic Device) Act, 2018 is payable by users of electronic
(Act 966), there are plans to implement communication services (ECS)
a Fiscal Electronic Device (FED) provided by a person permitted
system to replace the current manual or authorised under the Electronic
invoicing system for VAT. The GRA is Communications Act, 2008 (Act 775)
expected to fully implement the rollout and its Regulations.
of the FED system over a two-year
period. Users of ECS include individuals and
corporate entities, as well as the ECS
providers themselves.
22 | Navigating taxation – 2020 Ghana Tax Facts and FiguresThe rate of CST is 5% and this is Special petroleum tax
chargeable on ECS and recharges
Persons licensed to operate as oil
made by ECS providers. Charges
marketing companies are required
for ECS include those made for
to charge a Special Petroleum
monetary and non-monetary
Tax at specific rates per litre
consideration (e.g. promotions and
or kilogramme on the following
bonuses). CST is also applicable to
petroleum products:
interconnection services.
• Petrol;
ECS providers in Ghana are
ordinarily required to collect tax and • Diesel;
account to the GRA on a monthly
• Liquefied petroleum gas;
basis.
• Natural petroleum gas; and
The due date for filing this monthly
• Kerosene.
return is the last working day of the
month following the month to which
The tax is administered by the GRA
the tax return and payment relate,
and should be remitted by the last
unless the Commissioner-General
working day of the month following
directs otherwise.
the month of transaction.
If a CST return is not filed by the
due date without justification, a Customs and excise taxes
penalty of GH¢2,000 applies, with Ghana enacted the Common
an additional penalty of GH¢500 for External Tariff (CET) classification
each day the return is not submitted. system as the binding customs duty
regime in 2016.
If an extension approval has not
been granted by the Commissioner- The CET sets out the various
General of the GRA, interest duties and administrative charges
at 125% of the statutory rate is applicable to imports and exports
imposed on CST that is not remitted and also outlines the rates of excise
to the GRA by the due date. duties applicable to excisable goods
manufactured or imported into the
country.
PwC | 23Import duties ECOWAS levy
Typically, import duties range An Economic Community of West
between 0% and 35%, depending African States (ECOWAS) levy of
on the nature (description) of the 0.5% is imposed on imports of
item imported as specified in the goods from non-ECOWAS Member
CET. States into ECOWAS member
states. Funding raised through
Import duties are generally levied on the ECOWAS levy is primarily
the cost, insurance and freight (CIF) used in financing the activities of
value of the item imported. the ECOWAS Commission and
Community institutions.
NHIL of 2.5% and GETFL of 2.5%
are also applied to the CIF (used Export and Import levy
for customs purposes) and import
duty amounts, whilst VAT of 12.5% A 0.75% Export and Import (EXIM)
is applied on the CIF, import duty, levy applies on all imports of goods
NHIL and GETFL inclusive amount. into Ghana. Proceeds from the EXIM
levy are subsequently allocated
to the Ghana EXIM Bank and the
Special import levy
Ghana Export Promotion Agency.
A special import levy of 2% applies
on the importation of certain goods. Import duty exemptions
The levy applies in addition to
the import duties and mandatory There are special import duty
statutory or administrative charges. exemptions for some privileged
persons, organisations and
This levy is expected to expire by institutions (e.g. diplomatic
December 2024. missions) as well as for persons
belonging to certain specific
industries (such as mining, oil and
African Union import levy
gas, and free-zone entities).
An African Union (AU) import levy
of 0.2% applies on eligible imports Administrative charges
of goods from Non-AU Member
States into AU member states for There are statutory administrative
consumption within the member charges ranging between 0.4%
state. The AU levy is mainly to and 3.45% of the value of goods
provide a reliable and predictable imported. These charges may
source of funding for the AU and apply regardless of any import duty
some of its specialised agencies. exemptions.
24 | Navigating taxation – 2020 Ghana Tax Facts and FiguresAdvance Eco levy Excise tax stamp
An Advance Eco levy is required Excise tax stamps are to be affixed
to be paid by all exporters of used to specific excisable goods which
electrical and electronic equipment are manufactured in or imported
and tyres imported into Ghana. into the country.
Specific rates of levy are applicable
for each item in accordance with the They apply to tobacco products,
HS Code classification. alcoholic and non-alcoholic
carbonated beverages, bottled
Export duties water and other goods specified by
the minister responsible for finance,
Exports usually attract 0% duty, before sale or before entry into the
except in some cases for specific market.
classes of goods.
Environmental tax
Excise duties
An environmental excise tax of
Excise duties generally range 10% applies to specified locally
between 0% and 175% of the ex- manufactured and imported plastic
factory price and apply to products and plastic products.
such as beer, spirits, tobacco
products, etc.
Airport tax
Airport tax is levied on local and
foreign travels. The tax is GH¢5 for
local travel and US$60–US$200 for
foreign travel.
PwC | 25Notes
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Navigating taxation – 2020 Ghana Tax Facts and Figureswww.pwc.com/gh PwC Ghana (www.pwc.com/gh) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. Over 276,000 people in 157 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. © 2020 PricewaterhouseCoopers (Ghana) Limited. All rights reserved. In this document, ‘PwC’ refers to PricewaterhouseCoopers (Ghana) Limited which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. (20-25297)
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