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
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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.
READ ALSO: Free Zone Act
The tax rate shown here applies to a company based on the industry category the company is based
|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
|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
|Interest (excluding individuals and resident
|Rent (on residential properties as an investment
|Rent (on commercial properties as an investment
|Royalties and natural resource payments||15%|
|Fees to lecturers, invigilators, examiners,
part-time teachers, and endorsement fees
|Commissions to insurance agents and sales
|Fees, emoluments, and other benefits to a
resident director, manager, or board member of a body of persons
|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)
|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
|Royalties, natural resources payments, and rents||15%|
|Management, consulting, and technical service
fees, and endorsement fees
|Repatriated branch after-tax profits||8%|
|Short-term insurance premium||5%|
|Income from telecommunication, shipping, and air
|Payment to petroleum subcontractors||15%
READ ALSO: Income Tax rates 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
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.
|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|
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
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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:
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
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
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
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
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:
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).
Self-Assessment Payment must be done in four quarterly instalment
READ ALSO: Taxpayer rights and obligations
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.
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.
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.
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