Ghana Tax & Business Guide - Deloitte

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Basic facts
Population 22.1m Inflation 15.2% (2005)*
Main languages English (official), African languages GDP per head US$467*
Currency Cedi (GHC) GDP growth 4.3% (2005)*
Economic communities WTO
GDP sources 35.9% agriculture, 25.6% industry, 39.0% services
*Economist Intelligence Unit.
Political environment

Ghana is a unitary republic with a multiparty democratic system, under which executive power is vested in a president, who is elected by universal suffrage. The incumbent, John Agyekum Kufuor, secured re-election in December 2004 for a second and final term.

The next national elections are due in December 2008.
Foreign trade and investment
Exports US$3.0bn (2005)* Imports US$4.5bn (2005)*
*Economist Intelligence Unit.

Leading export markets: The Netherlands, the UK, France and the US.

Major exports: Gold, cocoa, timber and tuna.

Ghana promotes foreign investment by sending investment missions abroad and by hosting investment-soliciting events in the country.

In the early 1990s Ghana embarked on a privatisation programme that has resulted in the sale of more than 300 of some 350 state-owned enterprises.
Business and financing
Business forms Public company; limited liability company; branch

The limited liability company is the most common structure used by businesses, particularly foreign investors.
Labour environment
Unemployment rate n/a Minimum wage GHC 13,500 (daily)

In early January 2006 the National Tripartite Committee was considering recommendations for increasing the minimum wage created by the committeeÌs Technical Subcommittee to GHC 14,840 or GHC 15,004.

Visitors are not allowed to accept employment unless such employment is within an authorised immigrant quota (ie the number of non-Ghanaians a business may employ in Ghana).

Immigrants intending to work are required to obtain the necessary permits prior to their arrival in the country.
Taxation
Corporate tax
Main rate 25%

Resident companies are taxed on their worldwide income; non-resident companies are taxed only on Ghanaian-source income. A company is resident if it is incorporated under the laws of Ghana or if its management and control are exercised in Ghana. Companies listed on the Ghana stock exchange and companies in the hotel industry are subject to a 25% rate. Lower rates may apply to companies in the manufacturing or agricultural industries, depending on location. Free Zone companies and rural banks are exempt from corporate income tax for the first ten years; thereafter, they are subject to an 8% rate. Exporters of non-traditional goods are also taxed at 8%. Dividends paid to companies and individuals are subject to a 10% final withholding tax. A branch pays an additional 10% tax on its repatriated profits.
Individual tax
Progressive rates to 25%

Resident individuals are taxed on their worldwide income; non-residents are taxed only on income sourced in Ghana. Residents are subject to tax at progressive rates up to 25%, but non-residents are taxed at a flat rate of 20%. An individual is resident if a citizen of Ghana (except where the individual has a permanent home outside of Ghana); or if present for 183 days in any 12-month period beginning or ending in the tax year; or if absent temporarily for less than 365 days and where the individual has a permanent home in Ghana. Dividends received are taxed by withholding at 10%.
Capital gains
Capital gains tax applies

Capital gains tax of 10% applies to capital gains of companies and individuals.
Indirect tax
VAT standard rate 12.5% (plus national health insurance levy of 2.5%)

Value-added tax (VAT) applies to most transactions at the standard rate of 12.5%. Exports are zero-rated. Exemptions are provided for livestock, seeds, vegetables, agricultural inputs, financial services, education and medical services, domestic electricity, water and land, buildings and construction. Registration is compulsory for businesses with a taxable turnover of GHC 25m over a three-month period (GHC 100m in a 12-month period). Group registration is possible. A national health insurance levy (NHIL) of 2.5% is also imposed on imports and on supplies of goods and services, but the levy is not imposed on exports.
Tax administration and compliance
Tax year Calendar year

A company must submit a tax return within four months after the end of the basis period ending within the tax year. Any person receiving income not subject to deduction of tax at source is required to make quarterly advance tax payments. Tax is withheld at source from employment income. Employees deriving income other than employment income must submit a tax return within three months after the end of the tax year.
Additional tax information
Withholding taxes Dividends and Interest 10%, Royalties 15%, Management and technical service fees 20%.
Tax treaties Ghana has concluded tax treaties with the UK and France.
Dividends Dividends are taxable income but exempt from withholding tax when paid to a resident controlling corporate shareholder.
Revenue protection There are transfer-pricing rules but no anti-tax haven (CFC) legislation.
Groups There is no provision for group taxation.
Incentives Hotels; export of non-traditional goods; rural or community banks; Free Zone enterprises, ICT, Agro processing.
Other taxes Customs and excise duties, Gift tax, Mineral royalty, National reconstruction tax, Registration fees, Stamp duty.