Even in the tax issues of a business, it is not always smooth going, especially to most entrepreneurs. Normally, in any country, one should know the tax system so that one does not go out of line, optimise one's business, and keep finances fine. New reforms have had to come into force over 2024 with what has happened, keeping everyone updated about the current rules, rates, and processes of domestic business tax.
This article takes you through some basics of business taxes in Ghana: who owes the tax, what to pay attention to, and how the recent changes might impact your business.
Why care about business taxes in Ghana?
Taxes form the backbones of any nation's economic development. Of course, Ghana is not an exception. For businesses, taxes contribute to national growth but play a more critical role in ensuring that your company stands legally and financially stable. That will keep you away from penalties, reduce tax liability, and even utilise available tax incentives and exemptions.
Whichever your enterprise size is, whether a small enterprise, medium-sized enterprise, or big corporation is, you should be clear about the following elements that make up Ghana's taxation regime.
Kinds of Taxation of Businesses in Ghana
Taxes that apply to businesses in Ghana have different kinds of tax and are operated by certain regulations, rates, and reporting. Some of these key taxes that businesses would have to deal with include the following:
- Corporate income tax:
It is the most important tax levied on companies in terms of their profit. As 2024 dawns, the flat CIT rate stands at 25%. That simply means that CIT will now be calculated as revenues minus allowable expenses by companies engaged in non-petroleum sectors.
- Special Sectors' Rate: There is a special rate for special sectors. For example, a business related to the oil and gas industries or a business enjoying some kind of incentive might be enjoying different rates of CIT. Besides, under the Small Business Taxpayer Scheme, small businesses are given the chance to pay a reduced rate.
- Value Added Tax (VAT):
VAT is a consumption tax imposed on sales of goods and services. VAT-registered businesses are obligated to recover VAT on sales and, besides that, pay VAT on purchases. The standard rate for VAT in Ghana is 12.5%, but with exempt or zero-rated goods and services.
If turnover from business is over ¢200,000, the firm will be compelled to sign at the Ghana Revenue Authority on value added tax. Micros and small business units fall into this category of doing little or no value-added tax by being exempted.
- PAYE Tax Pay As You Earn
An employer would have to deduct the PAYE tax from the salaries and wages of your employees and pay it to the tax authorities. PAYE tax rates are progressive; hence, they would rise with the increase in income, from 0% to 30%.
As an employer, you should also ensure that you get your employees correctly taxed. You should further lodge your monthly PAYE returns to GRA. PAYE compliance must not be disregarded since its non-compliance leads to some fines and penalties imposed on it.
- Capital Gains Tax
This includes withholding tax, again on remittances and contractors, especially to nonresidents. This is charging tax at source before release is made to the recipient.
For services, withholding taxes falls under 5% to 15%. This depends whether the service is of natural character, or if at all, the recipient may be considered a taxpayer. There are foreign payments that with no limit are taxed at about 20%.
- Excise Duty
Excise duties are imposed on some manufactured goods or those imported to Ghana. Some of the products that fall under this tax head include alcohol, tobacco, and petrochemical products. The CGT rate is 10% to 20%. The firms in the sectors involved need to register with the GRA for the application of excise duty; hence, they are taxed according to the various taxes.
- Capital Gains Tax (CGT)
This means the capital gains tax applies when the income is generated from selling a property or shares. It is 15 percent of any gain made from selling an asset for the corporation, although there are exceptions under some types of assets—for example, selling the shares in a listed company on the Ghana Stock Exchange.
- Stamp Duty
Stamp duty is a charge on documents containing evidence of transfer of title. Agreements, contracts, leases, and conveyance—transfer of property—form the former. The charge is subject to the quantum of the deal. Business organisations are by law mandated to stamp documents to avoid any form of penalty.
- National Health Insurance Levy (NHIL)
It also has a National Health Insurance Levy type of VAT directly contributing toward the financing of NHIS in Ghana. The rate for NHIL stands at 2.5%. NHIL applies the same range of goods and services for it as VAT.
- Customs Duties
These main tax constituents comprise the business of customs duty importation. The charges imposed by the customs officers are always relative to the value of the imported commodity, its classification, and its origin. Such charges greatly differ with regards to commodities and the mutually agreed trade.
Pivotal New Development in the Tax Regime in 2024
Tax legislation or taxation reform occurred on the Ghanaian taxation structures in the year 2024. The following formed part of it:
- Digital Service Tax: A large new tax on supply of digital services and products in the form of e-commerce, streaming online media, or advertisement. The money is 3% for any of which may apply to pay over the gross revenue received by Ghanaians; raised corporate income tax on small businesses.
- Updated Corporate Income Tax Rate for Small Businesses: The corporate income tax rate for small businesses is now lower as per the new tax system. This means that where annual income from the business is less than ¢500,000, its tax rate is now pegged at 15%. The bottom line of the above system is the empowerment of growth of small and medium-scale enterprises in Ghana.
- Electronic Tax Filing and Payment: The GRA also increased electronic portals for filing and remitting taxes. All remittances and filings shall be made in 2024 to the online platform of doing it since such a move will ensure tax compliance is made very easier while it helps ease administrative pressures to run business ventures.
- Stiffer Penalties for Non-Compliance: The government from 2024 put such violators of tax law through a stiffer system of punishment. These more rigorous punishments arose in such forms as non-timeous filing of tax returns, failure to pay, and misreporting of tax liabilities to such heights.
How to Remained Complaint with Business Taxes in Ghana
To remain compliant, here are a few practical tips for your business complying with Ghanaian tax laws:
- Register with the Ghana Revenue Authority: All businesses must register for purposes of obtaining a Tax Identification Number (TIN). A TIN is essential for any tax-related transactions and even filings.
- Keep proper records: You should keep all your incomes, expenses, and any kind of tax you pay. This will make your tax return error-free when audited to avoid penalties.
- File your taxes on time: Any tax return, VAT, CIT, PAYE, among others, must be filed by the set deadlines. Failure to do so attracts fines and interest on these monies. In fact, you file them easily through GRA's online platform.
- You will seek the experts: The tax laws have become so complicated. There is no need to start mentioning how the new tax rule and rate bring along complicity. You will still need a tax consultant and accountant that will guide all the relief or exemptions he can help you use.
- Monitor changes in tax: The tax landscape of Ghana is not static. Look out for changes at the GRA, and look out for any new information that may affect your business in terms of tax laws.
Conclusion
Thus, it is quite important to know the tax system in Ghana while running any business. Knowing this and following it will avoid expensive penalties, optimise the tax strategy, and enable your business to thrive amidst a constantly changing economic environment. New taxes, changes in rates, and digital filing of tax returns offer businesses an opportunity to make their tax obligations easier and contribute toward national development.
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