In Ghana, businesses may be subject to various types of income tax. Here’s a brief overview of these taxes.

Personal Income Tax (PIT)

Personal income tax is imposed on income earned by individuals, including salaries, wages, bonuses, and any other compensation for work performed. In Ghana, you must pay income tax if you are an employee, sole proprietor, or a partner and earn more than GH¢ 402 per month.

The Government of Ghana established the Income Tax Act, 2015 (Act 896) to regulate the imposition of income tax and related matters.

Ghana operates a progressive tax system, which means that individuals with higher incomes pay a higher percentage in taxes. The tax rates range from 0% to 25%, depending on the income brackets.

Click here to read more on income tax filing in Ghana 

Corporate Income Tax

Corporate income tax is levied on the profits generated by companies and corporations operating in Ghana, and it applies to both resident and non-resident entities. The standard corporate income tax rate in Ghana is currently set at 25%. However, certain sectors, such as manufacturing, may benefit from reduced rates.

In Ghana, corporate income tax is typically paid quarterly to the Ghana Revenue Authority. It’s important to note that this tax generally does not apply to small businesses, which are often structured as sole proprietorships or partnerships. Understanding your business’s registration type is essential to determine the applicable taxes.

Additionally, companies can deduct specific expenses, including operational costs and depreciation, when calculating their taxable income.

Withholding Tax

Withholding tax is a tax deducted at the source by a withholding agent—an individual or entity responsible for deducting tax—when making payments to another person. The withheld amount is then reported to the Ghana Revenue Authority (GRA).

The rates for withholding tax vary based on the type of payment. For instance, the rate for rental payments is generally 8%, while it may be 15% for professional services. For many taxpayers, withholding tax is regarded as a final tax, meaning they do not need to report that income on their annual tax returns.

Gift tax

This is a federal tax levied on the transfer of money or property from one person to another without the recipient providing something of equal value in return. Taxable gifts connected to employment include contributions from employers, associates, or third parties, as detailed in Section 4(2vii) of Act 896 (2015). These gifts include:

• Assets in Ghana, such as buildings, land, shares, money (including foreign currency), business assets, and vehicles.
• Gifts to residents (those in Ghana for at least 183 days) and assets credited or invested on their behalf.
• Monetary favors that benefit residents.

Exemptions apply to gifts received under a will or from close family members, as well as those used for public or charitable purposes by religious organizations.

Rent Income Tax

This tax applies to individuals who rent or lease property to others. Rent income refers to the amount received from leasing a property, and the tax imposed on this income is known as Rent Tax. 

Rent Tax must be paid within 30 days of receiving the rental income. If you fail to pay your Rent Tax by the due date, you will incur an interest penalty of 125% of the statutory rate, compounded monthly. 

Vehicle Income Tax

This tax is intended to be collected from commercial transport operators on a quarterly basis. Vehicle Income Tax (VIT) is due on the 15th day of the first month of each quarter—specifically, January 15th for the first quarter, April 15th for the second quarter, and so on. Upon payment of the VIT, vehicle owners receive a sticker that must be affixed to the front windscreen of their vehicle.

Pay As You Earn (PAYE)

This tax is deducted from employees’ income and paid by the employer on their behalf. It applies to all income earned by individuals in employment, regardless of whether it is received in cash or in kind. Employers are required to file a monthly PAYE return for their employees on or before the fifteenth day of the month following the deduction.