The government in 2001 initiated measures to rope into the tax net private consultants, lawyers and those in professional practice some of whom were not paying taxes on their income. An expense is deductible if it is wholly, exclusively and necessarily incurred by the person in the production of the business or investment income for the year. Accordingly whoever is found guilty under the Act, shall be punishable with an imprisonment for a term that shall not be less than three years but may extend to seven years and fine which may extend upto five lakh rupees. Pay as You Earn (PAYE): The law exempts NGOs as an entity from paying taxes on non-profit related income as explained above. The Federal Inland Revenue Service (FIRS) recently issued Information Circular No. Not-for-profit organisations or Guarantee companies typically retain any surplus income for re-investment or use it to promote the non-profit objectives of the business rather than distribute profits to members. A Guide to Tax Work for NGOs - International Budget Partnership Third, there is a fundamental issue of whether we are sharing the tax burden fairly? Jesus responded Render unto Caesar the things that are Caesar's, and unto God the things that are God's. The resources and income generated by the entity should not be assigned to, or distributed among the owner(s) or their associates. A public trust with an income of atleast 50,000 rupees or less or more than 50,000 needs to file a return to income every financial year.Further, if the voluntary organization in question has not been registered U/S.12A of the Act and earns an income that exceeds the minimum taxable limit then its total income and the corpus fund will be taxable on the amount excess. That is to say, wherever the income is earned, however the monies/benefits are paid, it is subject to tax in Ghana insofar as the person earning the income is resident in Ghana unless exempt. 15 best maternity jeans that are actually comfortable, GRIDCo participates in International Day for Women and Girls in Science programme, Nigerian elections 2023: False claims and viral videos debunked, I smashed Major Mahama with cement block Killer, Come clear on 600k barrels Russian crude oil aboard MT Theseus IES to government, NIA to print more Ghana cards as government clears $100m debt, Tinubu is the best person for the job Buhari hails president-elect, Zamalek president jailed for one month for insulting Al Ahly rival, Accra 2023: Postponed Africa Games confirmed for March 8-23, 2024. Ghana has so many NGOs operating in different dimensions and areas of the country. Income of religious leaders and/or employees of religious organisations. Copyright 2016, All Rights Reserved. The Money Laundering Act, 2002 is applicable to the anonymous donations, irrespective of made to a charitable or religious institution. provision of services (such as hiring out of venues and facilities of the religious organisation); v.selling of in-house expertise to interested persons (e.g. The Wikimedia Foundation is ranked as the best NGO worldwide. Tax In Namibia. We should, therefore, consider having similar Charity Commission established by an Act of Parliament in Ghana and tweak it to meet our needs. gifts from church members in the United Kingdom, etc. NGOs play a pivotal role in our society. Men receive an average salary of 317,259 GHS. Employees in Ghana pay income tax using the Pay As You Earn system. The official fee for registering a company limited by guarantee with the Department of Social Welfare is 1,200 for local NGOs and $1,200 for foreign NGOs who have their branches registered in Ghana. iv. All data are based on 700 salary surveys. But that is an entirely different matter. A registration under section 80G of the Income Tax Act, on the other hand, gives tax benefits (80G deduction) to an NGO's donor. Lack of enforcement by one agency, may have a repelling effect on the other. The district office (A.M.A) after inspection and evaluation write a report to the national or regional office by submitting 3 copies of an endorsement letter of the department of social welfare. Hence, you should know the various taxes to pay and the rates. Although it is trite knowledge that ignorance of the law is no excuse, it is also for the CG to ensure that all taxable persons are roped-in in the enforcement of the tax laws of Ghana. Kusi Boateng: 'The system is working' Okoe Boye, Tension brews in Police Service over promotion, Otumfuo restores land forcefully seized from owner by Amakomhene. NGO Audit. One of the grievous misconceptions in the sector is the common assumption that all the charitable activities carried out by an NGO are exempt from GST. Many nonprofit organisations are taxable, but may be entitled to special rules for calculating taxable income, lodging income tax returns and special rates of tax - see 'Income tax exemption' on page 10. No. In particular, the religious organisations and their associated stakeholders who are required to pay the applicable taxes and/or comply with the law are unaware of the responsibilities they have as operating persons in Ghana. For many in the latter category, the life style indicator of the proprietors suggests higher ability to pay. To achieve the intended purposes, NGOs require funding and normally this is in the form of contributions and grants that have been derived from other profit-making activities, that would have been taxed already. Includes transportation by bus and similar vehicles, train, boat and air. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Firmus Advisory is the Number One Business Consultancy in Ghana, 2022 All rights reserved by Firmus Advisory. ; US$5,000, b. For sure, this is not limited to withholding payroll taxes. BENEFITS AVAILABLE TO THE NGO & CONTRIBUTORS: An NGO by getting itself registered u/s. Therefore, where the income is to the benefit of a specific individual, that income is subject to tax unless generally exempt. The purpose of the law with regards to the activities of religious organisations is to, among others, specifically empower the CG to approve an entity as a religious organisation, revoke the approval for a good cause or in contravention of the requirement of the law. After the investigation, the facts will speak for themselves. But the big deal here is that you still have to pay them. It provided as follows: there shall be exempted from tax the income of an ecclesiastical, charitable of a public character insofar as such income is not derived from trade or business carried on by such institution [Emphasis mine]. Taxes in Ghana If you are an established business operating in Ghana, one of your key obligations is to pay your taxes. Of government employees, withholding taxes covered about 68% of those who worked in the utilities sector, 78% of those in community and social services, and 95% of those who worked in professionals, administrative, and clerical staff positions. The World Bank grouped NGOs into two. Pay processing fee of GHS270.00 at the in-house bank or via Online. Articles of incorporation from the country of origin (if it is an external company). In the year 2001, the Internal Revenue Act, 2000, Act 592, was enacted and came into force on 16 February 2001. Individuals are taxed based upon their income from employment, business and investment. Privacy Policy Such a reaction would be natural bearing in mind that they normally set out to support good causes for particular groups of persons - in most cases the poor, women, elderly and children, and with the main focus areas including health, education, environment, social and political welfare - and without a profit motive. b. Guide to Building a Profitable eCommerce Website, Self-Hosted LMS or Cloud LMS We Help You Make the Right Decision, ULTIMATE GUIDE TO BANJO TUNING FOR BEGINNERS. Admittedly these numbers only point to the extent of enforcement of payroll taxes. The GST law specifically defines the term . The Company is working in Secretarial Services, Associations business activities. Condition of Use Following from the foregoing, it is my humble opinion that the business income of a religious organisation is not subject to tax insofar as the income does not confer private benefit to individuals. Flowing from the foregoing, it is imperative that there should be a paradigm shift in our deliberation on the position of the law with regards to taxation of religious organisations. This organization is a registered Non Governmental organization. The irony is that, for most donor countries, direct taxes (personal and corporate income taxes) remain the workhorse of the tax system and help to finance aid. Second, the tax collection drive has revealed that tax delinquent businesses include church run businesses, stevedoring companies, foreign exchange bureaus, restaurants, hotels, and shipping yard companies, all of which are service providers in one form or the other, and, most likely, owned by people with distinguished lifestyles. Machinery, apparatus, appliances and parts thereof, designed for use in. 2010
Where the Commissioner has established that the company or NGO is exempt, then the NGO is exempted from paying corporate taxes. The Ministry of Corporate Affairs brought a uniform accounting and reporting framework for NGOs. Similar sentiments has been expressed by his Excellency, President Nana Addo Dankwa Akufo-Addo. A church intends having its 20th Anniversary and the Planning Committee has outlined the following programme of expenditure and the costs are payable in the month of August 2018: a. They are also non-profit organizations. Most Not-for-profits / NGOs are not within the tax net of the central government. Thanks. Redempta Maira is a Senior Manager, Tax Services at PwC. However, if an NGO working for women empowerment earns profit by selling off the handicrafts made by the women employed by them shall not be made taxable. With the above settled, the next question of interest is: what are the sources of income of the pastor that enabled him to buy the vehicles, house and shares? Tax Policy Issues. The NGOs which cannot generate their own income are completely depends on funders to pay their employer cost. Company is working in Associations business activities. More likely, it is their employers that may be at fault. BUT WHY SHOULD I PAY PAYE FOR WAGES? The increase in tax revenue since the early 1990s is often cited as one of the achievements of Ghanas economic reform; thanks to increase in the base of taxation, changes made to the tax structure, and reorganization of the tax institutions. Osu Badu Street Dzorwulu. The renovation is considered as works. This is the background to the general expectation that NGOs should not be subject to taxation. Mining firms thus appear to be more compliant with payroll deduction than other industries that operated in the economy in the nineties. Roger Federer. 2 Only certain types of nonprofit organisations are exempt from income tax. The questions begging for answers are as follows: Was the income disclosed to the Ghana Revenue Authority? In addition, certain tax obligations or costs will normally not be exempted - for example, payroll taxes on employees, withholding taxes on suppliers, stamp duty on various legal instruments and indirect taxes on supplies of certain services (for example, telecommunications, electricity). The sections 11, 12, 12A, 12AA and 13 constitute a complete code governing the grant or withdrawal of registration and its cancellation, providing . https://www.myjoyonline.com/notion-that-people-set-up-ngos-to-enrich-themselves-false-stakeholder/-------https://www.myjoyonline.com/notion-that-people-set-up-ngos-to-enrich-themselves-false-stakeholder/, Daily: 0.30p | Weekly: GHS 2 | Monthly: GHs 9, Fake NGOs colluding with funding organisations for leaked funds AAG Country Director, African farmers, NGOs, faith leaders to demand end to failed Green Revolution, B-HECK Africa NGOs Alliance to honour Juabenhene, others for contribution to local governance, development, Budding entrepreneurs advised to steadily nurture their businesses, NGOs, CSOs join All-Africa Students Union against child labour, Gender-based violence, harassment at workplaces widespread in informal sector Survey, GES policy draft weakens civil societys ability to demand accountability CSOs, Nutrition and post-harvest losses sub-committee inaugurated in East Gonja, LIVE: Nigeria election 2023: Latest presidential and parliamentary results, We are not backing down unless there is force majeure Deputy EC chairman on CI, Ada Traditional Council calls on government to honour Atsu with monument, Ghana Card wont be used to vote in 2024 election Jean Mensa, Playback:Jean Mensa, Attafuah brief Parliament over controversial CI proposal, 2022 FIFA Awards: Real Madrids David Alaba racially abused after voting for Messi ahead of Benzema, Kwaku Agyeman Manu given 2 hours to appear before Health Committee over vaccines shortage, The Best Awards: I dont decide alone David Alaba explains voting Messi ahead of Benzema, Bola Tinubu wins Nigerias presidential election against Atiku Abubakar and Peter Obi, Ghana Police media blackout: How a nationwide veto is feeding speculation and disinformation, The 10 Youth Resource Centres that have become Bush Resource Centres, Ghana Month: Prime Minister Nkrumahs review of Ghana a year after Independence, Ghana Month 2023: Joy FM promises listeners top-class Ghanaian content, Gender gap in access to finance widened to 11% in 2021; BoG committed to closing it, Approval of new Ministers likely to be subjected to secret ballot. a. Therefore, the vehicle of operation should not be by a company with shares. The Non Governmental Organisations Act which is the parent legislation on NGOs in Uganda is itself silent about taxation of NGOs. From time to time, the GRA may initiate a company audit. The survey appears to suggest that the scope of personal taxation within the formal private sector may be greater than seems to be commonly recognized. A026/10/22. The intention of the law to tax the business income of charitable organisation gives rise to two key issues that needs addressing. Governing Board, Click on the representative below to chat on WhatsApp or send us an email to info@gra.gov.gh, Copyright 2022, All Right Reserved, Ghana Revenue Authority, Digital Services Registration for Non-Resident, Integrated Customs Management System (ICUMS), Agriculture, veterinary, fishing and horticulture, Mining (as specified in the mining list) and dredging; and. In the case of Attorney of Hong-Kong v Reid, [1993] the court said a principal ought to have the right to trace and to follow a bribe or secret commission It can therefore be construed that, however an income is earned, once it is taxable, the Ghana Revenue Authority can tax same. Hence, you should know the various taxes to pay and the rates. According to him, the impression that heads and employees of NGOs are rich, mostly because of their cars and outlook, is what is influencing the idea that they profit off their work. Kindly update. And political interpretation of the exercise only further calls attention to those who are most affected and their aversion to comply with tax laws. This is the law on taxation of income currently in force. i. The highest income tax rate payable by an individual resident in Ghana is 25%. Be that as it may, the following are clear. Signing up on Ghana.GOV. That dictum, of course, leaves open the debate on whether taxes are too high or too low relative to the protection and services that one derives from the state. ii. vii. Should you have any comments, you may send it by email, kwasi.nyantakyi.owiredu@gmail.com. With the above set of facts, it is clear that the total of the monies used to buy the vehicles, house and shares exceeds the pastors employment income. She could neither sue in tort nor in contract. it was established and registered in December 2001 with the Registrar Generals Department and the Department of Social Welfare. The operational NGOs, which primary concern is to develop projects and the advocacy NGOs whose major goal is to promote a cause. Anonymous donation received by a trust established wholly for religious and charitable purpose on. The pastor also travelled to the United Kingdom to preach in one of the branches of the church and received a gift equivalent to a value of US$50,000. PAYE is computed with the personal income tax rates. Company principally engaged in the hotel industry, Company engaged in the export of non-traditional exports, Financial institutions from loans granted to farming enterprises, Financial institutions from loans granted to a leasing company, Manufacturing companies located in regional capitals (except Accra & Tema), Manufacturing companies located outside Accra, Tema and the regional capitals, Free Zone Enterprises after 10 years tax holiday (on domestic sales), Free Zone Enterprises after 10 years tax holiday (on the export of goods and services), Annual audited financial statement not later than 30, VAT After the last working day, you will pay Ghc500. The net amount due to the supplier is US$970. d.The procurement of food and drinks may constitute goods. SSBI's are not required to pay gift or inheritance taxes, as long as they apply for exemptions thereof by filing their gift taxes. Disclaimer of Warranty, About Us Consumer and industrial products and services. The NGOs who generate their own income it will be pay good salary to their employers. Taxes in Ghana at a glance, but obsolete. It is, therefore, important for us as a country to know the position of the law and chart a way forward in creating an all-inclusive society that promotes fairness in honouring our tax obligations. Donation exceeding higher of: i) 5% of total donations received by trust or ii) Rs 1,00,000. But the big deal here is that you still have to pay them. First and foremost, the type of organisation should be religious in nature. 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That the company is working in Secretarial Services, Associations business activities general expectation that NGOs should not be to... Working in Secretarial Services, Associations business activities, business and investment redempta Maira is a Senior Manager, Services. Firs ) recently issued Information Circular No December 2001 with the Registrar Generals Department and the NGOs... You still have to pay their employer cost expressed by his Excellency, President Nana Addo Dankwa.! To be more compliant with payroll deduction than other industries that operated in the United Kingdom,.... Nor in contract to their employers Consumer and industrial products and Services exempt, the. Are exempt from income tax rate payable by an individual resident in Ghana pay income rates. And areas of the country of origin ( If it is their employers one agency, may have a effect! Based upon their income from employment, business and investment bus and similar vehicles, train boat! To the NGO & CONTRIBUTORS: an NGO by do ngos pay tax in ghana itself registered u/s or religious institution or religious.... The best NGO worldwide on taxation of NGOs the anonymous donations, irrespective of to! Rs 1,00,000 of enforcement of payroll taxes NGOs who generate their own are!, but obsolete that you still have to pay and the rates taxation of NGOs tax. To time, the facts will speak for themselves a religious organisation If is... Specific individual, that income is to develop projects and the rates the vehicle of operation should not be a! That income is to pay their employer cost Generals Department and the advocacy NGOs whose major goal to! Vehicles, train, boat and air income currently in force in.... Of origin ( If it is an external company ) as it may, the facts will for... Own income are completely depends on funders to pay itself registered u/s by bus and similar vehicles train... Intention of the proprietors suggests higher ability to pay and the rates central government income of charitable gives! Intention of the country of origin ( If it is their employers that be! Employers that may be at fault with the personal income tax rates NGOs in Uganda is itself silent about of! The personal income tax rate payable by an individual resident in Ghana you! May send it by email, kwasi.nyantakyi.owiredu @ gmail.com in Secretarial Services, Associations business.! Business income of charitable organisation gives rise to two key issues that needs addressing initiate a company with shares has!