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Ghana

Country Name: Republic of Ghana
Currency: Ghanaian Cedi (GHS)
Primary Tax Authority: Ghana Revenue Authority (GRA)
Key Legislation:

  • Income Tax Act
  • Value Added Tax (VAT) Act
  • Customs Act
  • Investment Promotion Act
  • Tax Procedures Code

Fiscal Authority Allocation

Centralized Fiscal System:
Ghana operates a centralized tax system, with the Ghana Revenue Authority (GRA) responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and customs duties.

Corporate Income Tax (CIT)

Standard Rate: 25%
Ghana imposes a corporate income tax rate of 25% on resident companies and non-resident companies with a permanent establishment in the country. Special reduced rates may apply to companies in specific industries, such as agriculture, mining, and oil and gas.

Corporate Forms and Taxation:

  1. Resident Companies: Taxed on worldwide income.
  2. Non-Resident Companies: Taxed only on Ghana-sourced income.

Exemptions and Incentives:

  • Investment Incentives: Ghana’s Investment Promotion Act offers tax holidays, reduced CIT rates, customs duty exemptions, and VAT relief for companies investing in priority sectors such as manufacturing, agriculture, tourism, energy, and technology.
  • Free Zones: Companies operating in Ghana’s free zones enjoy a 10-year CIT holiday and reduced rates of 15% thereafter, alongside VAT and customs duty exemptions.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 12.5%
Ghana imposes VAT at a standard rate of 12.5% on most goods and services. Additionally, the National Health Insurance Levy (NHIL) of 2.5% and a GetFund Levy of 2.5% apply, effectively bringing the total VAT-related rate to 17.5%.

Exemptions:
Certain goods and services, including unprocessed agricultural products, healthcare, education, and financial services, are VAT-exempt. Exports are zero-rated, allowing businesses to reclaim VAT on inputs used in producing export goods.

Personal Income Tax (PIT)

Progressive Rates:
Ghana applies a progressive personal income tax system to residents’ worldwide income and non-residents’ Ghana-sourced income.

Resident Tax Rates for 2023 (Annual Income):

  • Up to GHS 4,380: 0%
  • GHS 4,381 to GHS 15,000: 5%
  • GHS 15,001 to GHS 30,000: 10%
  • GHS 30,001 to GHS 60,000: 17.5%
  • Above GHS 60,000: 25%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 25% on Ghana-sourced income.

Deductions and Allowances:
Taxpayers may deduct expenses such as social security contributions, mortgage interest, pension contributions, and charitable donations from taxable income.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees must contribute to Ghana’s social security system, which provides pensions, healthcare, and other benefits.

  • Employer Contribution: 13% of gross salary.
  • Employee Contribution: 5.5% of gross salary.

Withholding Taxes

  • Dividends: 8% for residents, 8% for non-residents
  • Interest: 8% for residents, 8% for non-residents
  • Royalties: 15% for residents, 15% for non-residents
    Ghana imposes withholding taxes on payments to non-residents, including dividends, interest, and royalties. These rates may be reduced under Ghana’s double taxation agreements (DTAs).

Transfer Pricing Rules

Ghana follows the arm’s-length principle for related-party transactions. Companies must ensure that cross-border transactions between related entities are conducted at market value. Transfer pricing documentation is required for large multinational corporations with significant related-party transactions.

Special Tax Regimes

  • Free Zones: Companies operating in Ghana’s free zones benefit from a 10-year CIT holiday, after which a reduced rate of 15% applies. They also receive exemptions from VAT and customs duties on imported inputs and capital equipment.
  • Investment Incentives: Ghana offers various tax incentives under its Investment Promotion Act, including CIT holidays, reduced tax rates, and VAT exemptions for companies in sectors such as agriculture, infrastructure, energy, and ICT (information and communications technology).

Other Taxes

  • Customs Duties: Ghana applies customs duties on imported goods, with rates ranging from 0% to 20%, depending on the type of goods. Raw materials and essential goods may qualify for reduced or zero customs duties.
  • Excise Taxes: Excise taxes are levied on goods such as alcohol, tobacco, petroleum products, and luxury items.
  • Property Tax: Property taxes are imposed by local governments on land and buildings, based on their market value.

Double Taxation Agreements (DTAs)

Ghana has signed several double taxation agreements (DTAs) with countries such as the United Kingdom, South Africa, and Germany. These agreements help reduce withholding taxes on cross-border income and prevent the double taxation of income earned in Ghana and other jurisdictions.

Local Taxes

Local authorities in Ghana may impose property taxes, business license fees, and municipal service levies. However, most significant taxes, including CIT, PIT, and VAT, are centrally administered by the Ghana Revenue Authority (GRA).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed within four months following the end of the financial year. Personal income tax returns are generally due by April 30th. VAT returns are filed monthly or quarterly, depending on the size of the business.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. The GRA imposes interest at 125% of the prevailing Bank of Ghana rate on overdue taxes, with additional penalties for tax evasion or underreporting.

Recent Developments

Oil and Gas Sector Investment:
Ghana’s oil and gas sector continues to attract significant investment, with the government offering tax incentives to companies engaged in oil exploration, production, and export. These incentives include CIT reductions, customs duty exemptions, and VAT relief on imported equipment.

Renewable Energy and Infrastructure Projects:
Ghana is promoting investments in renewable energy projects, particularly solar and hydropower. Companies investing in renewable energy and infrastructure development may benefit from tax holidays, reduced CIT rates, and customs duty reductions.

Digital Economy Taxation:
Ghana has introduced digital tax measures to capture revenue from the growing e-commerce and digital services sector. The government is implementing digital tax platforms to improve compliance and simplify the filing process.

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