The next National Democratic Congress (NDC) flagbearer, John Dramani Mahama announced plans to scrap the following draconian taxes within his first 90 days in office to alleviate hardships and ease the high cost of doing business:
1. E-levy
2. COVID levy
3. 10% levy on bet winnings
4. Emissions levy
To further ease hardships, the NDC will:
5. Review Import duty on vehicles and equipment imported into the country for industrial and agricultural purposes.
6. Apply the Price Stabilisation and Recovery Levy on fuel to cushion consumers.
7. Rationalise fees and charges at our ports to reduce the burden on importers and Ghanaians.
8. Undertake a comprehensive reform of Ghana’s VAT regime to provide relief for households and businesses. This will include:
– reversing the decoupling of GETFund and NHIL from VAT
– upwardly adjusting the VAT registration threshold to exempt micro and small businesses
-repealing the law imposing VAT on domestic electricity consumption.
– reversing the VAT flat rate regime
To enhance revenue mobilization, we will:
9. broaden the tax base and plug leakages in tax collections.
10. review the tax exemption regime to promote transparency, economic growth, technology transfer and job creation.
Ghana’s taxation system comprises various taxes levied on individuals, businesses, and goods and services to generate revenue for the government. Here’s an overview of the key taxes in Ghana:
1. Personal Income Tax
- Residents: Individuals who have stayed in Ghana for more than 183 days in a year are considered residents for tax purposes. Residents are taxed on their worldwide income at graduated rates.
- Non-Residents: Individuals who do not meet the residency criteria are taxed only on income earned in Ghana at a flat rate of 25%.
- Tax Rates for Individuals (2023):
- First GHS 4,380: 0% (Tax-free threshold)
- Next GHS 1,320: 5% (GHS 4,381 – GHS 5,700)
- Next GHS 1,560: 10% (GHS 5,701 – GHS 7,260)
- Next GHS 36,000: 17.5% (GHS 7,261 – GHS 43,260)
- Above GHS 43,260: 25%
2. Corporate Income Tax
- Resident Companies: Companies incorporated in Ghana or managed and controlled in Ghana are taxed on their worldwide income.
- Non-Resident Companies: Taxed only on income sourced from Ghana.
- Standard Corporate Tax Rate: 25%
- Reduced Rates:
- Companies in specific sectors like agro-processing, rural banks, and export of non-traditional goods may enjoy reduced rates.
- Financial institutions listed on the Ghana Stock Exchange may have reduced rates as incentives.
- Special tax rates apply to free zone companies and entities operating in specific industries.
3. Value Added Tax (VAT)
- Standard Rate: 12.5% on the supply of goods and services.
- National Health Insurance Levy (NHIL): An additional 2.5% levy on goods and services.
- Ghana Education Trust Fund Levy (GETFL): Another 2.5% levy applied alongside VAT.
- Total Effective VAT Rate: 17.5% (inclusive of NHIL and GETFL).
4. Withholding Taxes
- Dividends: 8% for residents; 8% for non-residents.
- Interest: 8% for residents; 8% for non-residents.
- Royalties: 15% for residents and non-residents.
- Rent (Commercial): 15% for residents and non-residents.
- Management and Technical Service Fees: 20% for non-residents; varies for residents.
- Contract Payments: 7.5% for residents; 15% for non-residents.
5. Capital Gains Tax
- Standard Rate: 15% on the gains from the disposal of capital assets.
- Exemptions: Gains from agricultural land, personal effects, and certain shares in resident companies may be exempt.
6. Customs and Excise Duties
- Customs Duties: Levied on imported goods at varying rates depending on the type of goods.
- Excise Duties: Applied to specific goods, such as alcoholic beverages, tobacco products, and petroleum products, whether imported or locally produced.
7. Property Tax
- Property Rates: Levied by local authorities based on the value of property. Rates vary depending on the location and use of the property (residential, commercial, industrial)… and more
