Company Formation in Ghana
Why choose Ghana to start a Company?
Forms of Business Entities
Sole proprietorship:
If you are running your sole proprietor business with your own name, you do not have to register it. However, if you are running the business under a name that is different from your name (a business name), you must register the business name.
Partnership
Companies
Limited Liability Company (LLC)
The minimum paid-up share capital requirements are as follows:
- Wholly Foreign Shareholding companies:
a) Service Industry: Minimum of five hundred thousand US Dollars (USD 500,000) in equity
b) Trading Industry: Minimum of One Million US Dollars(USD 1,000,000)in equity
- With Foreign Participation:
a) Service Industry: Minimum of Two hundred thousand US Dollars (USD 200,000) (Stated Capital) investment by Foreign participant and minimum of 10% Ghanaian investment.
b) Trading Industry: Minimum of one million 1,000,000 US Dollars (USD 1,000,000) in equity by Foreign participant and minimum of 10% Ghanaian investment. Ghana limited liability companies must appoint a company secretary as well as a licensed Ghanaian auditor.
Also, Ghanaian LLC must have a registered office in Ghana with a post office box and must maintain accounts and records at such registered office.
Company Limited by Guarantee
Free Zone Companies
Total exemption from payment of Income Tax on profits for 10 years and 15% post 10 years. Total exemption from payment of withholding tax on dividends arising out of Free Zone Investment.
Unlimited Liability Company
Foreign entities in Ghana
Subsidiary company
a resident company.
External Company (Branch office)
An external company is subject to Ghanaian tax laws (income & corporate tax).
Taxation in Ghana
Companies pay tax on their business and investment income also known as gains and profits, which does not include expenses made to obtain the income.
Ghana taxes corporate income made internationally in the same way that earned inside the country. The average corporate tax rate is 25%, which differs on the basis of industry, area and nature of business. The country does not have known exemptions to transfer in foreign earned profits.
Value Added Tax
Withholding tax
There is no known tax on wealth in Ghana. There are no known inheritance and transfer taxes in GH.
Distinction between Branch office and Subsidiary company
Basis | Branch office | Subsidiary company |
---|---|---|
Structure | It is branch of an existing company usually registered by a Local Manger on behalf of the company registered outside the jurisdiction of Ghana | Subsidiary is an independent business form which operates under the regulations imposed by the Ghana authorities. |
Dependency | Branch is operationally dependent on the parent company. | Subsidiary has a higher degree of independence and is allowed to complete other activities than the parent company. |
Liability | Branch offices have unlimited liability. | Subsidiary company have limited liability. |
Directors | Minimum one director is required. | Minimum two directors are required. |
Resident Company secretary | There is no requirement of resident company secretary in branch office. | In case of subsidiary resident company secretary is required. |
Corporate Shareholders | Branch offices can have corporate shareholders. | Subsidiary companies cannot have corporate shareholders. |
Statutory audit | Not required. | Mandatory. |
FAQs
Qu. What is TIN in business registration in Ghana?
Ans –The full meaning of TIN is Taxpayer Identification Number. It is a requirement for registration of all businesses in Ghana. Ghana Revenue Authority is the agency mandated to issue TIN.
Qu.Can a foreigner register a sole proprietor business d in Ghana?
Ans –The law does not permit foreigners to own sole proprietor businesses. It is solely for Ghanaians.
Qu. Must all the directors of a company be resident in Ghana?
Ans –Either all directors or at least one should be resident in Ghana.
Qu. Must the local manager of an external company be resident in Ghana?
Ans –To register an external company, the law demands that the local manager of the company be resident in Ghana. Therefore, the address of the local manager should be in Ghana.
Qu. Can one person act as director and also as a Company Secretary of a company in Ghana?
Ans –With a director doubling as a Company Secretary, the Companies Code 1963 (Act 179) permitted it. However, under the new Companies Act 2019 (Act 922) a director can only act in the capacity of a Company Secretary if he meets the qualifications so specified, if not the service of a qualified
person or company would be required by the company.
Qu. When do companies need to file for annual returns?
Ans –Every registered company is required to file for the first annual returns after 18 months of registration. However, is mandatory to file at end of every other year, and or Limited Liability Companies, not later than 30th April of the preceding year and should be filed together with the signed audited accounts approved at an Annual General Meeting.
Qu. How are companies formed in Ghana?
In Ghana, businesses are formed by purchasing a Business Operating Permit application form from any Sub-Metros Cash Office, completing it, and submitting it to the Revenue Mobilization Officer (RMO) at the District Assembly's office.
Qu. What is the minimum capital for a company in Ghana?
The minimum capital requirements for companies in Ghana vary based on the type of ownership and business activity. For joint ventures with Ghanaian partners owning at least 10% shares, the minimum capital is US$200,000. Wholly foreign-owned companies must have a minimum capital of US$500,000. General trading companies, employing a minimum of 20 skilled Ghanaians, require a minimum capital of US$1,000,000. These capital thresholds ensure financial viability and commitment to the Ghanaian market.
Qu. What are the steps in registering a company in Ghana?
- Conduct a name search at the Registrar General’s Department (RGD) for a unique company name ending with "Limited" or 'Ltd".
- Obtain Tax Identification Number (TIN) for all directors, secretaries, and shareholders from Ghana Revenue Authority (GRA).
- Complete Form 3 from RGD with director, secretary, and auditor details.
- Pay stamp duty (1% of stated share capital), incorporation, and filing fees at RGD.
- Receive certificate of incorporation upon approval, making the company a legal entity.