NGOs are also exempt from customs duties under the EAC-CMA which is the law that regulates customs in all the EAC partner . Such tax cheating can be overcome (not eliminated) through sting operations and random audits. In reality, this understanding may not be true in all the cases. From time to time, the GRA may initiate a company audit. any function other than those that the entity is established to operate; and, iii. Therefore, the applicable withholding tax rate is 3%. Failure by an entity to file an income tax return will automatically result in a late filing penalty (calculated at a monthly rate of TZS 225,000 ). 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. conferring a private benefit on any person other than a benefit that is in pursuit of a function for which the entity is established, Act 896 does not define public nature. 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. 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. You have successfully registered for the webinar. African Youths for Peace And Organization is situated in Mataheko, Ghana. 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. It is so with the collection of consumption (the value added) tax. A deduction shall be disallowed for an expense that is of a capital nature. And to achieve that, the tax burden must be shared equitably on the basis of ability to pay. But based on the very nature of government expenditure-process and on the ability to pay, many would reasonably argue that those employed in other areas of the private sector must be equally tax compliant. 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. The economic slowdown had a considerable impact on households. To the extent income is applied to such charitable or religious purposes in India. Therefore, the applicable withholding tax rate is 3%. The more senior the job within the NGO, the higher the wages will be. What is the cost of registering an NGO with Social Welfare? STEP 2- Apply for a Tax Payer Identification Number (TIN). 12A of the Act within a year from the date of its establishment can avail exemption from the payment of tax u/s.11 of the Act. It is actually the opposite. 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. 4. 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. As noted earlier, the degree of compliance varied greatly in the private sector. Application letter on the organizations official letterhead, Memorandum of understanding between the NGO and the Government. ; US$5,000, b. No. Therefore, the applicable withholding tax rate is 5%. Resident persons are taxed on their worldwide income while non-resident persons are taxed on income which has a source in Ghana. 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. 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.. This article is written by Amrita Basu, a student of New Law College, Bharati Vidyapeeth (Deemed) University, Pune. conferring a private benefit, other than in pursuit of a function of the entity as a religious institution. NGOs can accept donations from private individuals, for-profit companies, charitable foundations, and governments, whether local, state, federal, or even foreign. . Who or that is and functions as a religious organisation of a public character ; b. Taxes in Ghana If you are an established business operating in Ghana, one of your key obligations is to pay your taxes. Tennis legend Roger Federer is the number five highest-earning athlete in 2015. Gifts derived in course of employment, business and investment; Now, where a religious leader acquires property or makes investment in his own name, the question that must be asked is; what is the source of income of the person? Therefore, the vehicle of operation should not be by a company with shares. Reliefs in the fifth Schedule have been revised as follows: The general Corporate Income Tax rate is 25%. That said, for tax purposes, the taxman may be unconcerned with how the income is generated. 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 1961 (fourteen years later), the Income Tax Ordinance introduced the concept of exemption from payment of income taxes by ecclesiastical or charitable organisations, Christian Council of Churches, the Muslim Council, et al. As well as paying tax in Namibia, you might also still be eligible to pay some . Ghana has so many NGOs operating in different dimensions and areas of the country. Taxation of a resident person in Ghana is based upon the principle of worldwide taxation. But that is an entirely different matter. This appears not to be the case now. But their major areas of operations include research, policy analysis, community development, environmental protection, advocacy, training, and development. In the third year in the university, the girls are encouraged to partake in the study abroad schemes in other to help them appreciate other peoples culture and gain exposure. Machinery, apparatus, appliances and parts thereof, designed for use in. A provisional tax assessment is raised on all businesses yearly, including new business registrations. Speaking on Joy Primes Prime Morning, Mr Nkaw said that in as much as their salary is competitive, they are still not at the top to be perceived as extremely rich. Of every 100 workers in these occupations, about 93, 86 and 85, in that order, had taxes deducted from pay at source. 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. In practice, therefore there is the need for NGOs to ensure the office of the Minister for Finance is also involved in the process of negotiating contracts with the other relevant Ministry, so that the exemptions concluded can be gazetted. 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). Construction and renovation of church premises. 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. This has come to strengthen my position.Thanks, Jonathan Casely Wiredu (FMVA,MSc,BCom,HND). Section 5(1) of Act 896 provides that the income of a person from a business for a year of assessment is the gains and profits of that person from the business for the year or part of the year. Income derived by religious organisation from engagement in business activities may include: i.sale of anointing oil, water, and similar goods, ii. Prior to June, the deduction should have been three percent of the basic wage of those. 35AC of the Act if an NGO gets registered the central government approves of the scientific research programs/projects to be carried out by such organization. Your answer is as good as mine. Africa energy and utilities - Tax guide 2019. The withheld tax must be paid to the Ghana Revenue Authority within 15 days following the month to which the payment relates. As I speak now, I dont believe Im rich, but, maybe if you go and pick someone from the community where I work, they will say Im rich because I have a driver who comes with a Prado, but they tend to forget that we passed through rural communities, he said. Form 3A must be witnessed by Commissioner for Oaths/Notary Public/Self-Declared. Income subject to Tax under the Tax Law, a. Given our history in the early 1980s, such cynicism is understandable. c.Provision of services such as training, or consultancy. All businesses registering with the GRA, must do so at the nearest GRA district office closest to the project location. All rights reserved. Yet a wrong had been done her which needed righting. 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. The Department of Social Development under the Ministry of Gender, Children and Social Protection does not have the power and legal backing to deal with these pertinent issues. Please feel free to contact us for your Customs classifications and validation, Copyright Notice Individual Donors for Education 2023/2024; 3000+ Grants, Donors and Foundations Providing Support and Individual Support for Education. In Ghana, income tax is levied in each year on the income of both resident and non-resident persons . In many countries, NGOs are exempt from paying state and federal taxes. Taxes in Ghana at a glance, but obsolete. The Wikimedia Foundation is ranked as the best NGO worldwide. TAX LIABILITY OF NGOs: All voluntary or charitable organisation as defined U/S.2 (15) of the Act has the liability to pay service tax on the income actually received by them, except for that donation which has been specified to be 'corpus' by the donor in writing. Are religious leaders or founders, and employees of religious organisations required to pay taxes and/or comply with the tax laws of Ghana? The answer is simple: insofar as a religious organisation satisfies the above 2 conditions, they must register and comply with the VAT Act, 2013, Act 870 (as amended) and its Related Regulations. Similarly, Act 179, requires all Companies and Trusts to file their annual accounts (returns) with the Registrar of Companies. 2. Penalty for late filing of tax returns are. This is the law on taxation of income currently in force. Using an Umbrella Company for Income Tax : 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. It is the employers responsibility to file monthly tax returns on behalf of its employees. 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. Tax benefits. f.Establishment of Charity Commission, The Corporate governance in the Charity industry in Ghana appears not to be robust enough to build trust that assures all and sundry that assets of these organisations are safeguarded. Purchase of anniversary T-Shirts and Clothes; US$1,000, c. Rental of the premises of a near-by School which has bigger space for reception after the programme; US$2,000, d. Catering - caterer to provide food and drinks for the programme; US$1,000; and. 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. Well, essentially there is a two step process in terms of (i) recognition as a charitable organisation and (ii) minimum annual expenditure on the organisations activities. It applies to Mallams, Imams, Traditional Priest (e.g. In respect to income tax, NGOs are charitable organizations and are exempt from payment of income tax. The operational NGOs, which primary concern is to develop projects and the advocacy NGOs whose major goal is to promote a cause. So, in a word do remember to file the returns even if no tax is payable! 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. Income Exempt from Tax under the Tax Law, The law does not specifically mention incomes that are attributable to religious organisations which are not subject to tax. In Tanzania, NGOs can apply to be recognised as charitable organisations, subject to written applications filed with the Commissioner of TRA. By industry, the percentage of employees who had taxes deducted from their pay at source ranged from 92% of those in the mining sector to 25%t of those in the construction industry. As provided by the Act only 85% of the total income received by an NGO is to be utilized and the remaining 15% is accumulated for later use and corpus fund forms a part of such remaining income. ii. Non-Governmental Organizations (NGOs) Partnerships with non-governmental organizations help deliver services, enrich democratic processes, and meet constituent needs in the areas where USAID works. A026/10/22. 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. 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. Some local NGOs do pay as normal SMEs do, with some graduate level positions calling for as low as 25K when international NGOs will pay more than 50K for the same position. There is no reason to believe that the individuals who did not have taxes deducted at source are inherently non-tax complaint. 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.". These originate either from the foreign offices of the developed countries or from the multilateral organizations set up by different countries such as the United Nations, the World Bank, the Asian Development Bank. Brochure or publication about your organization. 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. b. 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 highest income tax rate payable by an individual resident in Ghana is 25%. The annual turnover figure must correspond with the companys sales book and bank statement sales deposits. 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. Supply of goods such as books, anointing oil, etc. No. "However, before you are exempted from paying certain taxes, the individual must go to GRA with a. Some paid up, some negotiated to settle years of overdue taxes to avoid the dishonour of business closure. This will help the efforts in bringing sanity in terms of the objects of religious organisations, how they operate, among others. This is the background to the general expectation that NGOs should not be subject to taxation. Section 97(4) of Act 896 provides that income accruing to or derived by a charitable organisation is exempt from tax. Section 97(5) provides that Section 97(4) does not apply to business income of the charitable organisation [Emphasis mine]. The organization is working in Associations business activities. The commitment to paying taxes is low. Where is the Russian oil stashed in Ghana? After all taxes are compulsory payments and the individual measure of gains cannot be a sensible rule to go by in deciding whether or not to comply with the law. The highest income tax rate payable by an individual resident in Ghana is 25%. Alcoholic beverages bottled, canned, contained in kegs for sale or packaged in any other form; Non-alcoholic carbonated beverages bottled, canned or packaged in any other form. Importer or agent pays fees and obtains a vehicle toll pass and a waybill from Ghana Ports and Harbors Authority (GPHA). One of the new activities included was skate soccer and also beach soccer. Twelve companies owed nearly 12.3 billion cedis, nearly enough to finance the administrative expenses of the Ministry of Justice in fiscal year 2006. 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. Section 10(1) of Act 179 provides that a Company Limited by Guarantee shall not be incorporated with the object of carrying on business for the purpose of making profits. 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). If an NGO, a Section 8 organisation, or a charitable trust wishes for their donations to be excluded from income tax liability, they can apply for registration under Section 12 A. Hse. 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. Ghana Quality Organization is situated in Accra, Ghana. 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. E Plaza 2 Building, Accra, Ghana, P.O.BOX AN 16859, Accra North Ghana, Accra. Taxed at 30%. In an interview, Ms Chisanga said Zambia is losing huge. List of Grant Funding for Individuals & Grants for NGOs. 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. 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