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Domestic Tax

Frequently Asked Questions
GRADomestic TaxDomestic Tax

Income Tax

Why should I pay income tax?

Your taxes help build the nation. Through the taxes we pay, the government is able to pay salaries of government workers and support common resources such as police, firefighters and public health workers. Tax money also helps to ensure  that government infrastructure, such as hospitals, clinics, schools, roads, bridges, etc. are well-built and well-maintained. In other words, without taxes, it would be impossible for the government to run the country. Income tax is one of the biggest sources of income for the Ghanaian government. The Government of Ghana introduced the Income Tax Act, 2015 (Act 896) to provide for the imposition of income tax. Click here to file and pay taxes online. 

Who pays income tax?

You must pay Income Tax if you are an employee, sole proprietor or a person in a partnership and you earn income above Gh¢ 319 per month. Read more about Personal Income Tax here.

What are the procedures for filing a return?

All Taxpayers must file a return on income not later than four (4) months after the end of the year. The return must be in a prescribed form indicating the assessable income, chargeable income, the tax payable, tax paid and any remainder to be paid.

 Any withholding certificates and other relevant information shall be attached to the return.

You can file your returns at any GRA office or online here.

How do I pay my tax?

You can File and Make Payments online, or visit any of the DTRD offices to file and make payment of taxes. 

Do I need to pay my taxes in Ghana if I do not live in Ghana?

If you do not live in Ghana but earn an income in Ghana, you will have to pay the taxes in Ghana. You will have to register with the Ghana Revenue Authority. If you live outside Ghana and you earn an income from a business transaction, Income Tax will be paid by the business.

Do I need to pay income tax as a start-up business?

Yes, you need to register with the GRA to pay Income Tax when you start a business. After you have registered your business with the Registrar General’s Department of Ghana, visit a GRA DTRD office with your TIN, business registration certificate, certificate to commence business and other supporting documents like bank statements, sale records, etc. to get registered. Learn more about Corporate Income Tax.

What is the difference between income tax and tax stamp, and which one do I need?

The Income Tax Stamp is designed for individuals operating in the informal sector, for example, small-scale self-employed dressmakers / tailors, hairdressers / beauticians / barbers, susu collectors, chop bar owners, cooked food sellers, butchers, container / kiosks / table top operators, garage owners, artisans (masons, carpenters, welders, mechanics, vulcanizers, electricians, sprayers), hawkers and itinerant traders. If you do not fit into this category, you will need to pay Income Tax instead of buying a tax stamp.

Do I need to buy a tax stamp if I have already paid Metropolitan, Municipal or District Assemble levies?

Yes, you do need it even if you have already paid levies. Read More about the Tax Stamp here.

How is my income tax determined if I have more than one source of income at a time?

Income from all sources, unless exempt, is put together and taxed using the graduated tax rate. Find more about Personal Income Tax and Pay As You Earn rates by clicking the links. 

What constitutes an offence in relation to PAYE?

It is an offence if the employer deducts the PAYE but does not pay the same amount to GRA or if the wrong amount is deducted or a wrong declaration is made. The monthly graduated individual tax rate should be used to calculate the amount. Read more on PAYE here.

What is payment on account?

Payments on account are tax payments made by self-employed people to spread the cost of the year’s tax. It is any partial payment of an amount that is owed, either to you or by you, that is not matched to a specific invoice, but can be matched later. They’re calculated based on your previous year’s tax liabilities, and can be thought of as a way of paying off some of your tax liabilities in advance.

How do irregular income earners calculate and pay taxes?

Income taxes are paid on the income filed within the year. In the case of irregular income, the tax will be calculated on the income received for the year. Any person who earns income in Ghana must either visit the nearest GRA DTRD office to declare and pay income tax or pay online File and make Payments.

What tax incentives do newly listed companies enjoy?

All newly listed companies do not enjoy incentives. However, the income of a young entrepreneur from the business of Manufacturing, Information and Communications Technology, Agro Processing, Energy production, Waste Processing, Tourism and Creative Arts, Horticulture and Medicinal Plants is exempt from tax for a period of 5 years. For 5 more years after the initial concession, the tax rate applicable will be:

  •         Accra & Tema – 15%
  •         Other regional capitals outside the three Northern regions – 12.5%
  •         Outside other regional capitals – 10%
  •         The three Northern regions – 5%

Can I object to an assessment?

Yes, If you are not satisfied with the provisional assessment served you by the authority, you can object. You can also perform a self-assessment for Income tax, either for yourself or your company. Download the relevant forms here.

What is the procedure for raising an objection to a tax assessment?

If you are not satisfied with a tax decision, including an assessment, you may lodge an objection with the Commissioner- General within 30 days of the tax decision. It must be in writing, and state precisely the grounds upon which the objection is made. You will be notified within 60 days of receipt of the objection, the decision made and reasons for the decision.

What are the procedures for tax Relief?

A tax relief is an allowance given to a resident individual to reduce his/her tax burden. To apply to the Commissioner – General’s office for relief, you need to fill a Tax Relief Application form and submit at any of GRA’s Domestic Tax Revenue Division offices across the country. You can pick up the form at the office or download here.

What is a tax Refund?

A tax refund is a reimbursement to a taxpayer of any excess amount paid to the government. This usually happens when you pay more tax during the year than you actually owe.

Who qualifies for a tax refund?

Any registered taxpayer who pays taxes in excess is eligible for a refund if they are certain that they don’t owe any other tax arrears. After an application is made, you will receive a response within 30 days.

What is the procedure for claiming your tax refund?

Within 3 years of the relevant date, apply to the Commissioner General for a refund of tax paid in excess of the tax liability. The Commissioner-General shall prescribe the form of the application. The application must be in writing and contain an explanation as to how the excess is calculated and attach evidence relevant to that calculation.

Relevant date here may mean any of the following:

 

  1. The event that caused the payment of excess tax
  2. The date on which a tax return was filed by the person with respect to the payment or
  3.  The date of payment of the excess tax.

What is Foreign Income?

Foreign earned income is income you receive for services you perform in a foreign country in a period during which your tax home is in a foreign country and you meet either the required residence test or the physical presence test.

Is foreign income taxable in Ghana?

The foreign income of a resident person is taxable except, where the employment income of the resident individual is from a foreign source and derived from a non-resident employer; or where a resident person is an employer and the individual is present in a foreign country for at least one hundred and eighty-three (183) days continuous.

What is double taxation?

Double taxation is the levying of tax by two or more jurisdictions on the same income, asset, or financial transaction.

How does double taxation occur?

Double taxation occurs in international trade or investment when the same income is taxed in two different countries. This is when income from foreign investments is taxed both by the country in which it is earned and by the country in which the investor resides.

How can one avoid double taxation?

To avoid this, many countries have developed double taxation treaties that allow income recipients to offset the tax already paid on investment income in another country against their tax liability in their country of residence.

Which countries have Double Taxation Treaties (DTT) with Ghana?

Ghana has Double Taxation Treaties with France, Germany, the United Kingdom, Belgium, the Netherlands, Denmark, Singapore, Mauritius, the Czech Republic, Ireland, and Malta, Switzerland, South Africa, Italy.

Value Added Tax

 

Who is supposed to register for VAT?

A person engaged in a taxable activity must register if  for a 12 month period or less, they make taxable supplies exceeding GHC 200,000; or if from the supplies made in any month, there are reasonable grounds to expect that, within the next twelve (12) months or less the person will make supplies exceeding GHC 200,000.

An unregistered taxable person shall register if at the end of any three (3) month period, the person made taxable supplies exceeding GHC 50,000 and from the supplies made there are reasonable grounds to expect that the total value of taxable supplies made by that person during that period and to be made during the next consecutive nine (9) months will exceed GHC 200,000. Please visit the VAT Standard and VAT Flat Rate pages for more information.

As an individual/organization should I pay VAT and income tax as well?

Once an individual earns income, Income tax is a compulsory tax obligation whereas, for VAT, you pay for it only when you are registered with VAT. VAT is a tax charged on the value added to the supply of goods or services to another person. It is a consumption tax and hence the burden of the tax rests on the final consumer.

 

What is the due date for submission of returns?

VAT returns are due for submission on the last working day of every month. Failure to submit returns attracts a penalty.

 

How do I treat Credits from a previous VAT return?

Where the total amount of deductible input tax allowed to a person for a tax period exceeds the total amount of output tax chargeable by that person, for that period the amount of the excess tax shall be treated as either a credit or refund.

On the VAT return at the Tax Due worksheet, you can include the figure from the previous month’s credit.

 

How do I account for VAT on imported services?

Where tax is payable on an import of services, the person liable for the tax is required to provide a service import declaration, and pay the tax due in respect of the import within twenty-one (21) days after the tax period in which the services were imported.

 

When is VAT on Imported Services due?

The tax due in respect of the import within twenty-one (21) days after the tax period in which the services were imported.

 

Can I deregister for VAT and what is the procedure?

Yes, you can deregister for VAT. VAT registered persons who longer meet the requirements to be VAT registered and who wish to be deregistered for VAT will have to submit a request for the cancellation of their VAT registration to the Commissioner-General of the GRA. Where the request is found to be in order, the person will be informed of the cancellation of his VAT registration by notice in writing.

In the event that GRA cancels the VAT registration, the person should:

  1.  Cease to hold himself to be a VAT – registered person as from the effective date of cancellation of the VAT registration.
  2.  Cease to issue VAT invoices as from the effective date of cancellation of the VAT registration.
  3.  Return to the GRA the certificate of VAT registration and all its copies.
  4.  Submit a return to GRA for the taxable period in which the cancellation of the registration occurs and attach a statement showing the details of any adjustment of the VAT return.
 

If I don’t meet the criteria for registering for VAT, but require a VAT Certificate for a one-off contract, how do I acquire one?

Visit your regular Domestic Tax Revenue Department office and speak to a tax officer on how you can be assessed for a VAT certificate.

 

Can a person who is not compulsorily required to register still apply for VAT registration?

A person, who is not required to register, may voluntarily apply to be registered.

 A voluntary applicant shall be registered as a taxable person where the Commissioner-General:

  1.   Is satisfied that the person has a fixed place of abode or business; or
  2.   Reasonably believes that, the person keeps proper accounting records related to any business activity carried on by that person, submits regular and reliable tax returns; or
  3. Reasonably believes that the person is a fit and proper person to be registered.
 

How can I claim my input VAT?

The VAT system allows businesses to deduct the VAT paid on purchases (Input Tax) from the VAT charged on sales (Output Tax). It is only the difference that is paid to GRA. In the case where the Input Tax exceeds Output Tax, the taxpayer can carry the credit forward or apply for a refund provided the required conditions are met.

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