With reference to the holding of the Chapel Hill School Limited (Supra) case, and considering the present state of all applicable laws, the income of a religious organisation established as a Company Limited by Guarantee or a Trust (with no individuals ultimately being the beneficiaries) in the performance of its objects, the business profit is not subject to tax in Ghana. Those earning above $700 should be having 3,5 percent of $700, which is $24,50, deducted from their salary. Income Tax The principal This resource describes the legal framework governing nonprofit organizations (also known as non-governmental organizations or NGOs) in Uganda, . Many have argued that NGOs are not to pay any form of taxes at all since they are engaged in humanitarian services which earns no taxable income. It is believed that for the same gross income, cocoa farmers and other exporters, for example, pay more in direct taxes than private transport owners, building contractors, lawyers and consultants because of how export taxes are levied and collected. Many of these either are self-employed, are in occupations that lend themselves to significant cash payments, or have other forms of income not subject to payroll withholding. Any excess revenue (surplus) remaining after all the expenditures of a religious organisation in any year has to be retained and applied in the future to the companys purposes. However, obtaining the charitable status does not amount to income tax exemptions. Pay as You Earn (PAYE): The law exempts NGOs as an entity from paying taxes on non-profit related income as explained above. The law streamlined the definition of religious organisation by going beyond the limited scope provided under S.M.C.D 5 to include religious organisations other than churches. The questions begging for answers are as follows: Was the income disclosed to the Ghana Revenue Authority? Any university/college/institution in the list notified by the Income Tax department or association or institution or public sector company or a local authority or to an association or institution approved by the National Committee carrying out scientific researchOr rural developmental programs, Rural Development Fund or National Urban Poverty Eradication Fund set up and notified by the Central Government. Am Looking for a Sponsor. In Ghana, tax is deducted from an employee's personal income at source through a 'pay-as-you-earn' scheme. Unlike before, all companies limited by guarantee were excluded from Corporate Taxes and Value Added Tax (VAT). PricewaterhouseCoopers 2008 Tax Facts and Figures 1 Income liable to tax Income tax is levied in each year of assessment on the total income of both resident and non-resident persons in Ghana. And political interpretation of the exercise only further calls attention to those who are most affected and their aversion to comply with tax laws. Considering the enormous powers of the CG, if he fails to enforce the law, who should we blame? A deduction shall be disallowed for an expense that is of a capital nature. When the revenue exceeds the expenses of the NGO, it is then that such organization earns profit. Firstly, in terms of common law for a person to be seen as carrying on a business, it is generally understood that there must be a profit motive - and indeed, this approach was also previously reflected in the income tax legislation, which prior to July 2017 explicitly defined the term business to exclude activities that are conducted without a profit motive. NGO (A non-governmental organization) is an association normally citizen-based that independently carries out its functions without government interference usually to serve some social or political purpose. From the foregoing, the total amount payable to the Ghana Revenue Authority is US$610. Kindly update. This organization is most concerned about the youths.it was set up in 2017 Informed Choice Foundation Ghana is a developing youth-headed Non-profit, a non-governmental organization in Ghana that works to empower the Ghana youths through access to information and to create a platform that will bring opportunities and grow the quality of life of young people. Some tax laws are complex, not easily understood. However, a religious organisation registered as a Trust (with individuals as ultimate beneficiaries), for example, the business profit shall be subject to tax. 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. Disclaimer of Warranty, About Us Lets take a hypothetical illustration below to ascertain how the income of a religious leader (such as a pastor) should be taxed. The normal response will be Of course!. iii. The programme should be segmented and tailored to meet the needs of each identifiable group for its effectiveness. And, any corresponding expenditure must relate to the purpose for which it was set up and approved by the CG. I smashed Major Mahamas head with a cement block Accused person tells court, How Bagbin ordered two NDC MPs to retract anti-Jean Mensa submissions, Bola Ahmed Tinubu: 10 key points about the Lagos 'landlord' set to lead Nigeria, Im a wizard Kyiri Abosom concedes as Delay bombards him with questions, Meet the late Ndebugre's son eyeing Zebilla constituency seat, Ablakwa vs. Rev. First and foremost, despite the provisions of the tax law, the question that needs answering is: whether or not it is legal for a religious organisation to engage in business for the purpose of making profit for which the tax law envisages taxing same? The stamp is affixed on specified excisable goods in Ghana whether locally manufactured or imported. Therefore, where the income is to the benefit of a specific individual, that income is subject to tax unless generally exempt. Payroll deduction of those who worked in the financial service industry was about 77%, and only 45% in the manufacturing and transport sectors. Sanction of persons for non-compliance. Taxable supplies include sale of anointing oil, bottled water, consultancy services, rental of premises, training, sale of magazines, diaries, calendars, stationery, Bible, and Quran. Currently, to qualify for any exemption, the company is required to write an official letter to the Commissioner General of Ghana Revenue Authority for the authority to assess, determine and if deemed necessary, grant the exempts based on the nature of business activities and where there will be any estimated profits or not from their operations. they are socially, politically, economically educationally and even morally helpful to the country. In Chapel Hill School Limited v the Attorney-General and the Commissioner, Internal Revenue Service, [2009, Unreported] Dr. Date-Bah JSC (as he then was), said Our comment on this argument by the Second Respondent (Commissioner, Internal Revenue Service) would be that the mere fact that what the Appellant does constitutes a business does not inevitably lead to the conclusion that the activity cannot be exempt from tax. First, personal income tax compliance is unevenly enforced across different sectors of the economy and by occupations. Secondly, the organisation should have a public character. Policymakers regularly review and propose . 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. Individuals are taxed based upon their income from employment, business and investment. NGOs play a pivotal role in our society. List of Grant Funding for Individuals & Grants for NGOs. 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. 1. And this accumulated income can be used within the next five years and if not used then shall be considered as the income of the eleventh year. Youthful Life Improvement Organisation is situated in Tamale, Ghana. Hence, you should know the various taxes to pay and the rates. Do NGOs pay tax in Ghana? The exercise turned out surprising results. This was in other to include more sports and youth development activities. Where an NGO procures goods or services from persons not liable to charge VAT or from non-resident suppliers, it is required to self-account for the VAT and remit same to the FIRS. Of government employees, withholding taxes covered about 68% of those who worked in the utilities. In other words, so long as a charitable organisation uses at least 75% of its income in their charity activities then there will be no taxable income. Lastly, the income that is being exempted should not confer private benefit. What are the other tax obligations of NGOs? Employees in Ghana pay income tax using the Pay As You Earn system. Hence, you should know the various taxes to pay and the rates. Sections 97(3)&(4) of Act 896 makes the income of a religious organisation exempt from tax except income attributable to business. The payment of the withheld tax and filing of the withholding tax return must be done by 15 September 2018. These exemptions are to be outlined during filing. A broader base makes lower rates possible. Do your tax with TaxTim and WIN R10,000 T&C's apply. In the said case, the court held that the person whose liability to tax was being assessed was thus Oxford University, which the court held to be indubitably an educational institution of a public character. The activities of the entity should not directly or indirectly be to the private benefit of the owner(s) or associates of the owner(s). If you are an established business operating in Ghana, one of your key obligations is to pay your taxes. Ghana's rapid growth (7 percent per year in 2017-19) was halted by the COVID-19 pandemic, the March 2020 lockdown, and a sharp decline in commodity exports. In respect to income tax, NGOs are charitable organizations and are exempt from payment of income tax. 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. . BUT WHY SHOULD I PAY PAYE FOR WAGES? The annual employment income of the pastor of US$100,000 [8,333.33*12months] is subject to employment income tax (PAYE) using the graduated scale. The withheld tax must be paid to the Ghana Revenue Authority within 15 days following the month to which the payment relates. It enforces the provisions of the tax acts and serves as the first arbiter between parties in the event of a dispute. In explaining what constitutes public character, the learned judge said business was of public character did not confer any private benefit to individuals. He further said that, for as long as the appellant was a Company Limited by Guarantee, there was a legal assurance that its business was not conferring any private benefit on individuals. The court concluded that an education institution of a public character is not subject to income tax during the said period it remained as a Company Limited by Guarantee until such time that it converted into a Company Limited by Shares. 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. See you there. Ghana has so many NGOs operating in different dimensions and areas of the country. Importer or agent pays fees and obtains a vehicle toll pass and a waybill from Ghana Ports and Harbors Authority (GPHA). publishing, and training); vi. Corporate tax is the tax imposed on the net income of the company, in other words, it is a levy placed on the profit of a firm to raise taxes. This definition limited tax exemption to the Christian Church with regards to their income other than derived from business. 2010 It is for the organisation, simpliciter. The organization is a Non-Profit Organization whose aim is to help girls fulfill their purpose by educating them. The accounts of religious organisations must, among others, capture all receipts and payments for each year, and a statement of financial position of the company or trust, as the case may be. Condition of Use Our government agencies must be up and doing to ensure compliance with the laws of Ghana by all. Tax Calculator: If you are a contractor and want a calculation on your tax and net retention in Ghana, we can supply it to you free of charge. Partners in Health, Oxfam, BRAC, International Rescue Committee, PATH, CARE International, Mdecins Sans Frontires, Danish Refugee Council and Ushahidi make up the top ten. Though educational institution is excluded from tax-exempt organisation under Act 896, religious institution remains. Instead, when the NGO has met the predefined criteria and has a ruling to be recognised as a charitable organisation, then it will be granted an additional tax deduction equal to 25% of its income. Customs duties. G31, G-Line, Patase Estate, Kumasi, Ghana. Obviously, the employment income of the pastor of US$100,000 and gift of US$50,000 couldnt have been enough to enable him make the kind of expenditure he made during the year. A026/10/22. Signing up on Ghana.GOV. About 55 of every 100 people who worked in industries either earned below taxable income or their employers failed to recognize their earnings as taxable. The most typical earning is 85,745 GHS. Fifth, while there is a constant push to raise taxes from the informal sector, policy-makers must weigh the cost of the enforcement and the equity-efficiency concerns in order to determine how and where best to allocate the tax collection effort. 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. Are there any tax credit for Solar and are there any tax holidays for investments of over 30 million dollars, Kindly update the monthly and annual income tax rates and the VAT and NHIL as well. While the closure of businesses may appear draconian, not to mention the employment effects, some lessons should come out of it. 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. The net amount due to the supplier is US$4,750. NGOs might focus on activities in areas involving health or health emergencies, education, infrastructure, advocacy of minority rights, support of the poor, and the reduction of crime. NGOs are also exempt from customs duties under the EAC-CMA which is the law that regulates customs in all the EAC partner . iv. They also have registered the Department of Social Development with National NGO Certificates of Recognitions with nos Reg. African Centre for Peace Building, AFCOPB. Ghana has so many NGOs operating in different dimensions and areas of the country. Hence my question: who pays taxes in Ghana? WELL NOTED. Categorizados em: Sem categoria Este artigo foi escrito por WHAT HAPPENS TO THE PROFIT EARNED BY THE NGO? Taxes in Ghana at a glance, but obsolete. The person must make taxable supplies; and. In Ghana, tax is deducted from an employees personal income at source through a pay-as-you-earn scheme. 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. The employer is required to withhold the employees taxes and pay to the Ghana Revenue Authority. Value Added Tax (VAT), National Health Insurance Levy (NHIL), and Ghana Education Trust Fund Levy (GETFund). STEP 4- Company limited by guarantee regulations form. The religious organisation must also apply to the CG for the grant of the status of being a religious organisation as a way of serving as check and balances to curtail abuse of the tax exemption process. 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. 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