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Withholding Tax

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GRADomestic TaxTax TypesWithholding Tax

Withholding Tax (WHT)

 

It is a tax which is deducted at source by a withholding agent (a person required to deduct tax) when making payment to another person and accounted for later to the GRA.

A registered partnership, company and trust and other businesses that make payment to another person for goods or services bought qualify to withhold the tax unless the person is exempted from paying the tax.  You must be registered to be allowed to withhold tax from business transactions.

Withholding Tax under Domestic Tax laws

Residential Persons

Income Rate %

Dividends

8

Interest (excluding individuals and resident financial institutions)

8

Rent on residential properties

8

Rent on non-residential properties

15

Fees to resident individuals as invigilators, examiners and part-time teachers or lecturers, and endorsement fees to individuals

10

Fees or allowances to directors, managers, board members and trustees who are resident individuals

20

Commission to insurance, sales, canvassing and lotto agents who are individuals

10

Supply of services by an entity exceeding GH¢2,000 per annum

7.5

Supply of general services by an individual

7.5

Supply of goods exceeding GH¢2,000 per annum

3

Supply of works exceeding GH¢2,000 per annum

5

Payments to petroleum subcontractors

7.5

Payments for unprocessed precious minerals

3

Royalty, natural resource payments

15

Non-residential Person

Income Rate%

Dividends

8

Management and technical service fees

20

Goods, works or any services

20

Royalties, natural resources payments and rents

15

Income from telecommunication and transportation business

15

Payments to petroleum subcontractors

15

Repatriated branch after tax profits

8

Interest income (excluding individuals)

8

General insurance premiums

5

Withholding by Employer

The income of an employee is subject to withholding tax by the employer. The obligation of the employer to withhold the tax shall prevail over any other obligations or provisions of any law.

Withholding from Investment Returns

A resident person shall withhold the tax on payments of any dividends, interests, rent, royalties, natural resource; and payments with the source in the country.

This withholding tax does not apply to:

  • Employee’s income;
  • Payments by an individual unless made in conducting a business;
  • Interest paid to a resident financial institution; or
  • Exempt amount.

Withholding from Supply of Goods, Service Fees and Contract Payments

A resident person shall withhold tax where that person pays:

  • Specified service fees with a source in the country to a resident individual; or
  • Service fees or an insurance premium with a source in the country to a non-resident person.

A resident person other than an individual shall withhold tax on the gross amount of payments to another resident person on the supply of goods, works or services in respect of a contract between the payee and the resident person.

A resident person shall withhold tax for payments made under a contract with a non-resident person for the supply of goods, works or services and shall within thirty (30) days of the date of the contract give notice of the contract to the Commissioner-General.

Statement and payment of tax withheld or treated as withheld

A withholding agent shall file and pay to the Commissioner-General within fifteen (15) days after the end of the month a statement in the prescribed form and tax withheld.

A withholding agent who fails to withhold the tax shall be liable to pay the tax.

A withholding agent is entitled to recover the tax paid from the withholdee.

Withholding Certificate

A withholding agent shall issue to the withholdee a withholding certificate in the prescribed form.

Final Withholding Payment

The following are final withholding payments:

  • Dividends paid by a resident company;
  • Rent paid by a resident individual under a lease of land or a building;
  • Rent paid other than rent received in conducting a business of sale or letting;
  • Payments made to non-resident persons that are subject to withholding other than payments derived through a Ghanaian permanent establishment;
  • Payments made to a subcontractor under petroleum operations; and
  • Payments made to a person in respect of examination, part-time teaching, supervising examination, endorsement fee among others.

Credit for Non-Final Withholding Tax

A person on whose behalf a tax has been withheld is treated as having paid the tax and is entitled to a tax credit of the amount withheld.

Impact on the Withholding VAT Scheme

VAT Withholding agents will continue to withhold at the time of payment 7% of the taxable value (the base on which VAT is computed) of all local taxable supplies made by a standard rated taxable person/supplier, and the difference of 5.5% of the taxable value, along with the taxable value, will continue to be paid to the taxable person /supplier.

The withholding VAT agent will continue to issue to the supplier withholding VAT certificate showing the amount of tax withheld. These Certificates are to be used for purposes of showing as proof of advanced payment of both the VAT and the levies.

The VAT registered taxpayer who has made supplies and has suffered withholding VAT will continue to file both their VAT and levy returns and account for these imposts in accordance with the provision of the VAT Act, 2013, (Act 870), NHIL and GETFund, Act respectively to the Ghana Revenue Authority.

Withholding VAT agents will continue to file withholding VAT returns by the 15th of the month immediately following the month to which a return relates and make payments of VAT withheld to the Commissioner – General.

Relevant WHT Downloads

Downloadable Forms and Online Tools for WHT