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 Corporate tax rate in Ghana 

What Is Corporate Tax?

Corporate tax in Ghana is a tax imposed on the profits of a corporation under the laws of Ghana as found in Section 1 of the Income Tax Act, 2015, (Act 896). It is not a revenue tax. The corporate tax rate in Ghana currently stands at 25%, with mining and upstream petroleum companies paying Corporate Income Tax (CIT)at a rate of 35%. Taxes imposed on a company’s taxable income is based on the net income the company obtained throughout one full business year and the type of company in operation 

BIZACCESS is a digital platform with online and offline services; a high commitment to assisting companies and businesses in Ghana to meet their regulatory compliance. We are your answer to the question of how to register a business in Ghana

Which entities are subjected to the Corporate Tax rate in Ghana?

  • A pension fund, provident fund, retirement fund, superannuation fund or similar fund
  • A partnership in which at least twenty of the partners have limited liability for the debts of the partnership
  • A friendly society, building society or similar society
  • A trust with at least twenty beneficiaries whose entitlements to participate in the income or capital of the trust is divided into units such that the entitlements are determined by the number of units owned
  • A non-resident company that operates through a branch or which has a permanent establishment within Ghana is subject to tax in the same manner as a resident company, if the permanent establishment is a Ghanaian permanent establishment
  • A government, a political subdivision of a government, or a public international organisation

READ  MORE: Types Of Businesses In Ghana

What to know about the Corporate Tax rate in Ghana 

 Under the income tax Act 2015 (Act 896), corporations are regarded as separate legal entities from their owners, thus if the company itself is taxed on all profits that it cannot deduct as business expenses. These taxable profits consist of money kept in the company to cover expenses or expansion (called "retained earnings") and profits that are distributed to the owners (shareholders) as dividends, under this Act business entities are subject to corporate income tax at a rate of one per cent except for Free Zone enterprises who are exempt from tax during that period but subject to corporate income tax of fifteen per cent on its exports after the concessionary period and twenty-five per cent (25%) where sales are made to the domestic market.

The calculation for Corporate tax to be paid = Revenue - Cost of goods

READ ALSO: Free Zone Act 

Rates for: Corporate tax rate in Ghana

The tax rate shown here applies to a company based on the industry category the company is based 

 

Item Rate%
Income of a Trust 25
The company principally engaged in the hotel industry 22
The company engaged in the export of non-traditional exports 8
Financial institutions from loans granted to farming enterprises 20
Financial institutions from loans granted to a leasing company 20
Manufacturing companies located in regional capitals  (except Accra & Tema) 18.5
Manufacturing companies located outside Accra, Tema and the regional capitals 12.5
Free Zone Enterprises after 10 years tax holiday (on domestic sales) 25
Free Zone Enterprises after 10 years tax holiday (on the export of goods and services) 15
Petroleum income tax 35
Mineral income tax 35

 

Read Also: Types of company registrations in Ghana 

What is the withholding corporate tax rate in Ghana?

Corporate tax withholdings can be beneficial for the business owners and be deductible from the company’s losses. Withholding rates for corporations in Ghana are shown as follows

 

Resident persons: income 

Rate %

Interest (excluding individuals and resident

  financial institutions)

8%
Dividend 8%
Rent (on residential properties as an investment

  income)

8%
Rent (on commercial properties as an investment

  income)

15%
Royalties and natural resource payments 15%
Fees to lecturers, invigilators, examiners,

  part-time teachers, and endorsement fees

10%
Commissions to insurance agents and sales

  persons

10%
Fees, emoluments, and other benefits to a

  resident director, manager, or board member of a body of persons

20%
Commissions to lotto agents 10%
Supply of goods exceeding GHS 2,000 3%
Supply of works exceeding GHS 2,000 5%
Supply of services exceeding GHS 2,000 (payments

  to persons other than individuals)

7.5%
Payment to individuals for the provision of services 7.5%
Payment to petroleum subcontractors 7.5%
Payment for unprocessed precious minerals 3%

Non-resident persons: income

Rate %

Dividend 8%
Royalties, natural resources payments, and rents 15%
Management, consulting, and technical service

  fees, and endorsement fees

20%
Repatriated branch after-tax profits 8%
Interest income 8%
Short-term insurance premium 5%
Income from telecommunication, shipping, and air

  transport

15%
Payment to petroleum subcontractors 15%

 

 

READ ALSO: Income Tax rates in Ghana 

What are Tax incentives in Ghana?

Tax incentives are designed to encourage particular economic activities by reducing tax payments for related companies. This is a result of a country’s tax code that means that there is a conscious loss of government budgetary revenue because they reduce either the tax base (tax allowance) or the tax due (tax credit). These incentives include a higher rate of capital allowance, exemption from the payment of duties, and most important of all for companies a reduced rate of taxes.

READ ALSO: Business tax exemptions

What is a Tax holiday?

This is a government incentive programme that offers a tax reduction or some kind of elimination to businesses. Tax holidays are given when governments want to boost the sales of certain items or increase active participation in certain activities, thus, during this period, there is a temporal reduction in sales taxes. 

The following businesses pay 1% tax during their tax holidays. These businesses pay the actual tax rates after their tax holidays.

Item Rate%
Agro-processing business conducted wholly in the country for the first five (5) years 25
Cocoa-by product business wholly in the country for the first five (5) years. 25
Tree crop farming for the first  ten (10) years 25
Cash crops or livestock (excluding cattle) for the first 5 years 25
Cattle farming for the first 10 years 25
Waste processing business for first 7 years 25
Income derived from a certified low-cost housing company low-cost housing company 25

What is Ghana’s VAT rate?

Value Added Tax (Amendment) Act, 2019, Act 1005 (VAT Act)

VAT is charged on the supply of goods and services made in Ghana and Importation of goods, other than exempt goods and services. The current standard VAT rate is 12.5%, except for supplies of a wholesaler or retailer of goods, which are taxed at a total flat rate of 3%.

 

VAT exemptions in Ghana include 

  • Importation of plant and machinery designed especially for use in the automobile industry by an automobile manufacturer or assembler who is registered under the Ghana Automotive Manufacturing Development Programme.
  • Importation of kits by an automobile manufacturer or assembler who is registered under the Ghana Automotive Manufacturing Development Programme.
  • Management fees are charged by a local fund manager for the management of a licensed private equity fund, a venture capital fund or a mutual fund.

 

READ ALSO:  VAT standard Ghana 

VAT is due by the taxable person making the supply in the case of taxable supply and by the importer in the case of imported goods. Most professional services are also subject to the same VAT rate, including the following:

  • Management services.
  • Insurance brokerage and other services.
  • Financial, tax, and economic consulting.
  • Engineering and technical services.
  • Accounting services.
  • Courier services.
  • Legal services.
  • Provision of satellite television.
  • Architectural services.
  • Services rendered by surveyors.

The GRA’s appointed VAT-registered withholding agents are expected to withhold 7% of the taxable value of goods and services when making payments for supplies subject to VAT at the standard rate of 12.5%.

 Download: Withholding Vat Return (WHVAT) Forms and Online 

Steps Entities Must Take to pay their corporate tax rate in Ghana 

  • First step

Register as a taxpayer: under the Income Tax Act, 2015, (Act 896) formal businesses are liable to taxation. Thus you are obligated to register at the GRA as a taxpayer. You can visit any DTRD Taxpayer Service Centre to be registered. 

 Note: You enquired by the GRA to ensure that all your business details (certificate to commence business, TAX Identification Number, certificate of incorporation, directors’ CV etc.) are up to date before you visit the GRA office. 

Download: taxpayer registration form 

  • Second step

Submit annual tax returns: your business or organization needs to file its annual returns for each year of assessment. The registered companies annual returns can be submitted or filled either by visiting any DTRD Taxpayer Service Center or electronically via 

NOTE: registered companies should submit in addition to annual returns an estimated self-assessment every company is required to submit a provisional self-assessment within the first quarter of every year of assessment. Taxpayers are permitted to revise upwards or downwards the self-assessment estimates made until the last day of the basis period of that company gra.gov.gh

  • Third step

Make payment: your company needs to make payment on all income earned and taxable activities. Such of this includes taxes due, arrears, penalties and interest thereon on appropriate due dates. On the GRA page Click on File and Make Payment or visit the nearest DTRD Taxpayer Service Centre to pay all your taxes.

READ ALSO: How to file and pay your corporate taxes

National Fiscal Stabilisation Levy (NFSL)

 Under Act 754  the NFSL is applied to specified companies and institutions to raise revenue for fiscal stabilisation of the economy and to provide for related matters. At a quarterly payable rate of 5% on profit to the Ghana Revenue Authority (GRA).

 The NFSL was originally planned to end in December 2017. However, an Act of Parliament (NFSL Amendment Act, 2019 (Act 1011)) has extended the levy from 2019 to 2024.

PASSED by Parliament and assented to by the President, this levy applies to entities which include:

  • Banks (excluding rural and community banks),
  •  Non-bank financial institutions,
  • Insurance companies, 
  • Breweries
  • Inspection and valuation companies
  • Companies providing mining support services,
  • Telecommunication companies are liable to pay communication service tax under Act 754, 
  • Shipping lines, maritime and airport terminals.

This levy shall apply to the previous industries mentioned above irrespective of any existing exemption granted to an entity under any other laws in Ghana. 

NFSL is payable in four equal instalments at the end of each quarter (i.e. March, June, September, and December).

Payment Period of CIT (corporate income tax)

Self-Assessment Payment must be done in four quarterly instalment

  • The first payment should be on or before the last day of the 1st quarter of the year i.e. 31st March of each year of assessment
  • Second payment should be made on or before the last day of the 2nd quarter of the year i.e. 30th June of each year of assessment
  • Third payment must be made on or before the last day of the 3rd quarter of the year i.e. 30th September of each year of assessment
  • Fourth payment should be made on or before the last day of the 4th quarter of the year i.e. 31st December of each year of assessment

READ ALSO: Taxpayer rights and obligations 

Annual Returns 

Note: a company’s annual returns should be submitted and paid on taxes not-in-dispute; this includes the outstanding of the difference between the tax in the final account and the self-estimated taxes paid.

Tax on Assessment or Audit

Payment of tax upon an audit performed or a provisional review notice issued by the Authority must be honoured within the period specified in such notice.

Local income taxes in Ghana 

Presently in Ghana, there are no local, state, or provincial government taxes on income. However, other local authority bodies (i.e. District Assembly/Municipal Authority) may also apply levies based on the location of business properties.

 

Corporate taxes, in general, contribute to the gross domestic product (GDP) of a country; thus helping a country’s overall economic growth. This will in turn create a ripple effect on the country's economy, increasing job creation, raising the standard of living; etc. the higher the standard of living of a country the high the level of consumption, which is quite beneficial for companies because they can turn in greater profit. 

BIZACCESS offers online Company Registration services in Ghana, Business name Registration in Ghana, TIN Number REGISTRATIONS, Filing of PAYE, VAT & SSNIT RETURNS in Ghana. Access our service.

 

 

 

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