PAYE should be filed before or by 15th day of the immediate month following the assessment month.
Withholding Tax should also be filed before or by the 15th day of the immediate month following the assesment month.
Failure to pay on due date attracts an interest of 125% of the statutory rate, compounded monthly on the outstanding tax
VAT/NHIL should be filed before or by the last working day of the immediate month following the month of assessment
Annual Returns should be filed before or by the end of the fourth month following the 12-month accounting period of the business.
What is “PAYE”?
Pay As You Earn (PAYE) is the routine deduction of tax from emoluments of employees by their employers, each time employees are paid.
What are the employees’ income tax rates?
Are there any allowances which are not subject to Tax?
All allowances are subject to tax except the following:
A reimbursement or discharge of a person’s dental, medical or health insurance expenses where the benefit is available to all full-time employees on equal terms
A passage to or from Ghana in respect of the appointment and termination of employment of an employee who
Is recruited or engaged outside Ghana
Is in Ghana for a purpose of serving the employer
Is not a resident of Ghana
How can I compute “PAYE”?
i. Deduct 5.5 percent Social Security from basic salary
ii. Add all allowances after the 5.5 percent Social Security deduction
iii. Deduct applicable personal tax relief(s)
iv Use the appropriate tax table to compute the tax on the remainder( i.e. Chargeable income.)
What is the tax treatment of Bonus?
Bonus up to 15 percent of basic salary is taxed at 5%. Anything in excess is added to the salary and taxed at the normal rate.
Are employees entitled to relief?
Yes, An employee can apply for personal tax relief(s) to the GRA through his primary employer by completing a Tax Relief Application Form.
Is an employee obliged to file a Tax Return?
The Employer files a Return of Income on behalf of the Employee. However, the Commissioner can by regulation request an employee to furnish a Return of Income if the employee has other sources of income e.g. rent, part-time job or other business income. Additionally, all employees who have more than one employment income are required to file a return at the end of the year.
Do you have to keep Records?
Yes, record keeping is incumbent on all Employers and employees with other sources of income.
What are Taxpayers’ Rights?
Right to Help and Information
Right to Courtesy and Consideration
Fairness and Transparency\n
Independent Appeal and Review
Right to claim refund of ascertained taxes overpaid
Right to claim all personal reliefs upon the satisfaction of all laid down conditions
Privacy and Confidentiality
Who is a resident?
Individuals are considered residents in Ghana if they have been in Ghana for at least 183 days in a 12 month period that begins/ends during the year of assessment.
An employee or official of the government of Ghana posted abroad during the year of assessment
A citizen with a permanent home in Ghana who is temporarily absent from Ghana for no longer than 365 successive days
A company is resident for tax purposes if that company:
is incorporated under the laws of Ghana, or
has its management and control exercised in Ghana at any time during the year.
A body of persons is a resident body of persons if that body of persons is:
established in Ghana
has a resident person as a manager at any time during the year of assessment or
controlled directly or indirectly by a resident person or persons at any time during the year.
A partnership is resident for tax purposes if at any time during the year, any partner in the partnership is resident in Ghana.
Does a resident person working outside Ghana need to pay double taxes?
A resident individual is liable to tax on all income from his employment in Ghana regardless of where paid. A resident person
or an expatriate who is paid both in Ghana Cedis and foreign currency is liable to tax in Ghana on both streams of income, in
addition to any benefits derived from the exercise of the employment
However, Section 112(1) of the Income Tax Act 2015, (ACT 896) allows you to claim a foreign tax credit that a resident person might have paid to the foreign country subject to sub-section (2) to (4).
At what rate is a non-resident individual taxed in Ghana from employment
A non-resident individual is liable to tax at the rate of 20% on any
income derived in Ghana or which accrues to him from an
employment exercised in Ghana. This rate applies to income earned
by a non-resident individual who has stayed in Ghana for a period or
periods, which in total is less than 183 days in a twelve-month
SECTION B - TAXPAYER REGISTRATION AND IDENTIFICATION NUMBER
What is taxpayer registration?
It is the formal registration of the business at the Registrar-General’s Department and thereafter at the Tax Office.
Who is required to register?
Any person who carries on any business is required to register with the Commissioner.
Is the registration compulsory?
Yes. The registration at the Registrar-General’s is compulsory for all companies and partnerships but optional for sole-proprietors. However, all businesses including soleproprietors must register with the tax authorities.
How do I register a business?
The first step in registering a business is to apply to the Registrar-General’s Department with the following details:
Name of business/company
Name of the owner(for sole-proprietorship)
Name of partners(for partnership)
Nature of the business
Location and address of the business
Date of commencement of the business
Why must a business register with the Domestic Tax Revenue Division (DTRD) after the registration at the Registrar-General’s?
Registration with the IRS is a requirement under the Internal Revenue (Registration of Business) Act,2005 (Act 684) which states “A person shall not carry on any business unless that person has registered the business with the Commissioner” and paid the registration fees as specified.
This is a one- time registration in the life of the business.
SECTION C - VAT FLAT RATE SCHEME (VFRS)
What is the VFRS?
A VAT Flat Rate Scheme (VFRS) is a VAT collection and accounting mechanism under which a registered taxpayer who is a retailer or wholesaler of goods applies a marginal VAT & NHIL rate of 3%, representing the net VAT payable on the value of taxable goods supplied.
Does it apply to all goods?
It does not cover the supply of any form of power, heat, refrigeration or ventilation
Are manufacturers covered ?
The VFRS is restricted to wholesalers (including importers) and retailers of taxable goods and does not cover manufacturers, service providers, etc. as provided for by section 3(2) of VAT Act ) 870 as amended by VAT (amendment) Act, 2017 (Act 948).
How does the VFRS work?
The VFRS applies a marginal tax percentage of 3% on the value of taxable goods supplied. This becomes the net VAT/NHIL payable by the tax payer. The VFRS does not therefore allow recovery of input tax.
What will happen to the VAT Credit balance arising from input tax on unsold stocks?
Migrated Taxpayers having outstanding VAT credit balance with the Commissioner General which is as result of input taxes on unsold stocks of goods, are to recover such credits as part of their cost build up to the selling prices of the unsold stocks of goods.
What happens to the VAT invoices with the tax payer?
Unused Commissioner General’s Standard Rate Scheme (SRS) VAT invoice booklets should be sent to the local tax office of the Taxpayer to be replaced with VFRS invoices at NO COST.
What do I do if I provide services and retail goods as well?
You are to account for VAT using the standard rate of 17.5 percent for the services rendered and 3 percent for the goods retailed.