The employment income of the pastor is US$8,333.33 per month. the name was changed in 2007 to Sports and Youth Development Organization Ghana. The net amount due to the supplier is US$970. A tax auditor must assess whether the annual income of the pastor is enough to fund the investments he made during the year after allowing for consumption expenditure, other capital expenditure incurred and savings he might have made in the course of the year. Disclaimer of Warranty, About Us A number of goods and services are exempt from VAT under the VAT Act, 2013 (Act 870) law (S. 15 Section 35/ Schedule 1). e.The photography services constitutes services. Finally, the urgency of the exercise drives home the need to increase domestic revenue mobilization in order to be less dependent on external resources for development. NGOs In Ghana: Full List, Functions & Contacts (2022), Traditional marriage in Ghana: All you need to know, The Top 10 Natural Hair Products in Ghana, Orphanages In Ghana : Full List, Locations & Contacts (2022), How to Calculate Electricity Bill in Ghana (2022), Districts in Accra: The Full List + Details, Regions in Ghana & Their Capitals + Other Details, Dentists Salary in Ghana: See What They Earn (2022), Causes of Unemployment in Ghana & Solutions, African Centre for Peace Building, AFCOPB, Centre For Disease Control And Prevention In Africa(CDC AFRICA), Centre for Energy, Environment, and Sustainable Development (CEESD), Centre for Popular Education and Human Rights, Ghana, Coalition of NGOs in water and sanitation, Cradle Of Hope for Relief and Development, Drama Network Serving Society for a Better Tomorrow, Emmanuel Educational Foundation and Sports Academy for the Physically Challenged, Ghana National Deaf Childrens Society (GNDCS), Ghana Rural Action Support Programme (GRASP). b. 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. Youth World Travel Organization (YWTO) is situated in Ghana. Therefore, whenever a religious organisation makes payments for, a. To fund development, especially public infrastructure, with any stamp of country ownership and unburdened by donor conditionalities, requires that Ghana strengthens its ability to raise domestic tax revenue; however small. 10% ceiling of the Gross Total Income applies, Government or any NGO approved local authority , institution or association used for the promotion of family planning, 10% ceiling of the Gross Total Income does not apply. After you are registered as an NGO, you can apply for tax exemption through your country's revenue agency. As well as paying tax in Namibia, you might also still be eligible to pay some . As already indicated, the Constitution of Ghana, 1992, the Income Tax Act, and the Holy Bible all require a pastor, as a man of God and a good citizen, to disclose his income to the Ghana Revenue Authority for an assessment to be made in compliance with law. Unicredit Bank, Near Dome Market, Accra, Ghana. Taxable in the same manner as voluntary contributions (without specific direction) as above. For tax purposes, a company is a separate and distinct entity from its employees and affiliates. The highest income tax rate payable by an individual resident in Ghana is 25%. Salaries, wages, overtime, leave pay, bonus, and similar employment income. Petrol, diesel, liquefied petroleum gas, kerosene and residual fuel oil. The School is not into the business of rental of commercial premises. My contribution is directed towards the Commissioner-General (CG) and his officials, the Government of Ghana, Tax Professionals and Students, and the Academia in our attempt to educate the religious fraternity, and the general public, in particular, the ordinary man in madina trotro. Therefore, the vehicle of operation should not be by a company with shares. After 14 years following the passage of the Income Tax Ordinance, then came the Income Tax Decree, 1975, S.M.C.D 5. (NGO Act Section 46 (1)). The person or organization will get a deduction of 50% of donation amount from the Taxable Income. Any additional day is Gh, Income tax After each quarter (March, June, September, December), you pay Gh, Annual financial statements After the last working day of April, you will pay Gh, Copies of payment receipts for general and operational expenses, Custom import documents as evidence for importation, VAT invoices must agree with the Monthly VAT filings, Monthly VAT filings must agree with the reported Annual turnover figure in the financial statement. In Ghana, tax is deducted from an employee's personal income at source through a 'pay-as-you-earn' scheme. The World Bank defines NPO's as "private organizations that pursue activities to relieve suffering, promote the interest of the poor, protect the environment, provide basic social services, or undertake community development.". A deduction to the extent of 50% of the contribution can be made if so has been made to either of the following: b) The Prime Ministers Drought Relief Fund. Regional Coordinating Council, Ministries, Accra, Ghana. So why the fuss about taxation of NGOs? The learned judge also referred to the South African case of Chancellor, Master and Scholars of the University of Oxfordv. Commissioner for Inland Revenue, Republic of South Africa to support his position. 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This exemption excludes professional services such as architectural or surveying (i.e. The highest income tax rate payable by an individual resident in Ghana is 25%. Careers How much does it cost to register an NGO in Ghana? International Federation of Women Lawyers (FIDA), Ghana, Kantudu Youth For Education And Development (Kayed), Northern Childcare Voluntary Organisation, Northern Sector Action On Awareness Centre (Norsaac), Nsaba Ghana Schools (now located at Nsaba Ghana Community Projects), Oulamii Sooj African Drum & Dance Academy, Pro-Action Network in Education & Skill Training, Poverty Eradication, Youth Empowerment, And Wealth Creation, Regional Advisory Information & Network Systems, Science & Technology Advocacy Renaissance, The Hope Centre Mercy Ministries International, Volta Youth Soccer & Cultural Dancing Academy, Wunnam Northern Development Organisation, helping the less Privileged Children Through Quality Education, www.communityaidinternational.blogspot.com, Youth For Tradition International Exchange, Youth In Advancement In Community Development, Youth Embassy Net Organization (Free the Blind). 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. Top Management The net amount due to the School is US$1,700. From the aforesaid provisions in Act 896, the lawmaker has empowered the CG to grant and revoke the tax exemption for religious institutions to promote tax compliance in Ghana. 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. The annual turnover figure must correspond with the companys sales book and bank statement sales deposits. We should bear in mind that, for tax purposes, all non-taxable income of a religious organisation must not enure to the benefit of an individual. Do NGOs pay tax in Ghana? The entity has a written constitution that prohibits that entity from, i.engaging in a party political activity, supporting a political party or using its platform to engage in party politics, ii. The organization is working in Associations business activities. A religious organisation that seeks the approval of the CG for tax exemption must have a written constitution with express provisions that prohibit it from: i.engaging in a political party activity, supporting a political party or using its platform to engage in party politics; ii. See you there. The resources and income generated by the entity should not be assigned to, or distributed among the owner(s) or their associates. Income of an approved Real Estate Investment Trust. 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. Who or that has been issued with a written ruling by the CG currently in force stating that it is an exempt organisation; and, c.None of whose income or assets confer, or may confer, a private benefit, other than in pursuit of the organisations functions. 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. Using an Umbrella Company for Income Tax : Hence my question: who pays taxes in Ghana? Initially it was exactly the scenario but with increase in unscrupulous practices these NGOs were made liable to pay tax and also allowed exemption. In respect to income tax, NGOs are charitable organizations and are exempt from payment of income tax. Misconception #1 - Understanding of the term 'Charitable activities'. 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. The least tax compliant were those who worked in occupations that involved service delivery, sales, transport and construction tradesmen. The annual turnover from the taxable supply must exceed GHC200,000 or part thereof in a quarterly or monthly period. 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. However, the value of the transaction is less GHS2,000 (approx.. US$420). For PwC updates on tax and other matters do follow @pwc_tz or visit our website www.pwc.co.tz. RUPFA was registered on 27th July 2015 with the number CG172072015 of Registrar General of Ghana under Companies Codes, 1963(Act 179). 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. publishing, and training); vi. U/S. Where is the Russian oil stashed in Ghana? NGOs play a pivotal role in our society. One of the most consistently challenging aspects of contracting in Namibia is complying with the country's tax system. Under Section 10(1)(d) of Act 592, it was provided that the income accruing to or derived by an exempt organisation other than income from any business is exempt from income tax. The maximum income tax rate in 2015 for single big earners is 39.6% on income over $413,200, amounting to tax due from Mayweather of about $120 million, barring any tax deductions he could claim. The Non Governmental Organisations Act which is the parent legislation on NGOs in Uganda is itself silent about taxation of NGOs. 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. 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. Speaking in the same interview, the CEO of KankoAssociates, Mary Tobbin Osei supported Mr Nkaws position, as a donor, adding that NGOs are unbending when it comes to accountability. 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. Value of Taxable Supplies = Ghc 12,000, NHIL = Ghc 12,000 * 2.5% = Ghc 300, COVID-19 LEVY = Ghc 12,000 * 1% = Ghc 120, Subtotal Ghc 12,720.00, VAT = Ghc 12,720 * 15% = Ghc 1,908.00, Total Amount to be paid to GRA = NHIL + GETFL + VAT, which type of tax rate is appropriate for manufacturing, retailing and wholeselling companies in ghana, keep updating us on current tax issues pending in the country. Therefore, the applicable withholding tax rate is 15%. Do your tax with TaxTim and WIN R10,000 T&C's apply. Women receive a salary of 260,912 GHS. Find Individual Donors List; List of 3500+ Donors and Foundations Supporting Individuals Worldwide! What concerns us now is the degree of compliance. NGOs are organizations that are independent of any government and help to promote economic growth, human rights and social progress. 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. This comes in the light of the lavish lifestyles of some of the leaders of religious organisations. Ordinary meaning can, therefore, be given to the stream of income attributable to religious organisations that are exempt from tax. Includes transportation by bus and similar vehicles, train, boat and air. Sections 97(3)&(4) of Act 896 makes the income of a religious organisation exempt from tax except income attributable to business. In particular, whilst for an individual there is no filing obligation if there is no taxable income, for an entity (i.e. The GST law specifically defines the term . Osu Badu Street Dzorwulu. This was in recognition of the contribution these organisations made in society as they prioritised the helping of the poor and needy whilst lifting the spiritual welfare of the people. A resident of India having a taxable income and a non-resident having an Indian passport can claim for benefits if they have made a donation to an NGO which is registered with the Income Tax Department and holds tax exemption status u/s. Some NGOs in Ghana generally work through volunteers and they are funded through free-will donations from people. Please feel free to contact us for your Customs classifications and validation, Copyright Notice For tax exemption purposes, a religious organisation must not engage in business the purpose of which is to make profit. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Articles of incorporation from the country of origin (if it is an external company). Donation to religious organisations creates a 360 degree benefit for individuals. Resident persons are taxed on their worldwide income while non-resident persons are taxed on income which has a source in Ghana. 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. The tax is calculated on a deemed taxable income equal to 5% of the gross income, which is taxable at the nonresident rate of 48% in the case of companies. WELL NOTED. Any other excisable product prescribed by the Finance Minister. Copyright 2016, All Rights Reserved. Antoa) and the like on all fours. This is because such donations do not only benefit these organisations, but are also tax deductible for the donors in computing their chargeable income. Conditions. It must be pointed out that educational institutions and religious institutions under enactments in Ghana prior to the year 2016 were considered as exempt organisations for tax purposes. Charitable or Religious trusts are constituted to promote the welfare of public and hence, Income tax law provides exemptions to any income derived from property held under such trusts if it is not misused or diverted to non-charitable objects. The operational NGOs, which primary concern is to develop projects and the advocacy NGOs whose major goal is to promote a cause. By occupational classification, the highest compliance rate could be found among those who worked in administrative and managerial positions, professional and technical skills jobs, and those in clerical jobs. This is the background to the general expectation that NGOs should not be subject to taxation. 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. In the year 2001, the Internal Revenue Act, 2000, Act 592, was enacted and came into force on 16 February 2001. The surplus can either be carried forward to the succeeding years without any kind of limitation or accumulated for a specific purpose. However, the Ghana Living Standards Survey carried out in 1998/99 gives us some indication about which groups of individuals most likely are paying taxes and who is not. If the business concerned is one that falls within the purview of the educational business carried out by an educational institution of a public character, then the income from that business will qualify for exemption from tax.. 2 Only certain types of nonprofit organisations are exempt from income tax. However, even if these agreements make a commitment to provide beneficial tax treatment, including exemptions, such commitments can only be enforced if they have effect under the relevant tax law (i.e. Scholarships for Study in Africa Scholarships for African Students Undergraduate Scholarships African Women Scholarships & Grants Developing Countries Scholarships . Section 97(2) of Act 896 provides that the CG shall before approving an entity as a charitable organisation (including a religious organisation), ensure that, a. Do NGOS pay tax in Ghana? The monies used by the pastor must have a source and must fall under one of the categories of income of an individual for which it should be subject to tax unless exempt. So, in a word do remember to file the returns even if no tax is payable! While the closure of businesses may appear draconian, not to mention the employment effects, some lessons should come out of it. 35AC of the Act. NHIL and GETFund shall apply with the necessary modifications as may be required by law. By necessary implication, the route for undertaking religious organisations in Ghana may be by a Company Limited by Guarantee under the Companies Act, 1963, Act 179, or by a Trust registered under Trustees (Incorporation) Act, 1962, Act 106 with no particular individual(s) being ultimate beneficiary(ies). She explained that this is because donors conduct quarterly monitoring of the various communities to be worked on to check if the NGOs are doing the work the grants given to them are meant for. Notwithstanding the fact that a religious organisation is not required to pay income taxes on receipts incidental to their objects, the law requires them to file their corporate income tax returns with the Ghana Revenue Authority within four month after each financial year of the organisation. Men receive an average salary of 317,259 GHS. Careers But progress has been slow since, especially when it comes to personal income and business profit taxes. 4. Youthful Life Improvement Organisation is situated in Tamale, Ghana. Taxtim and WIN R10,000 T & amp ; C & # x27 ; s revenue agency kerosene! External company ) that are independent of any government and help to promote a cause PwC refers the! How much does it cost to register an NGO, you can apply for tax purposes, a company shares. Companys sales book and Bank statement sales deposits donation to religious organisations creates a degree... 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