Therefore, the applicable withholding tax rate is 3%. 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. iv. When the revenue exceeds the expenses of the NGO, it is then that such organization earns profit. Therefore, the amount due the service provider is US$300. Jesus responded Render unto Caesar the things that are Caesar's, and unto God the things that are God's. He added that NGOs also pay taxes and are checked by the Ghana Revenue Authority (GRA). All data are based on 700 salary surveys. This appears not to be the case now. Medical services, essential drugs as listed under Chapter 30 of the HS Code produced or supplied in Ghana, specified active ingredients for essential drugs, and selected imported special drugs determined by the Minister for Health and approved by Parliament. Youthful Life Improvement Organisation is situated in Tamale, Ghana. You have successfully registered for the webinar. 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. Do NGOS pay tax in Ghana? 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. The more senior the job within the NGO, the higher the wages will be. More likely, it is their employers that may be at fault. Therefore, the applicable withholding tax rate is 5%. 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. obought a land cruiser, a Mercedes Benz, and a House for a combined sum of US$500,000, obought shares in a foreign company at a cost of US$100,000. 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. The implication of the above definition was that, for any religious organisation to qualify for exemption, it should not only be described on paper as such, it must also act pari passu. For domestic transactions, examples include, works (5%); goods (3%); services (7.5%); etc. Lack of enforcement by one agency, may have a repelling effect on the other. The CG is appointed by the President in compliance with section 13(1) of the Ghana Revenue Authority Act, 2009, Act 791. Do note that whilst it's branded as Ghana.GOV, the actual url is ghana.gov.gh. However, NGOs make efforts to pay fair wages to their workers. PAYE contributions are withholdings from salaries of employees to satisfy their income tax responsibilities. 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. Construction and renovation of church premises. In addition to all these, what has been made taxable are the kind of anonymous donations made by any organization or institutions or individual to a charitable organization at a rate of 30%. In respect to income tax, NGOs are charitable organizations and are exempt from payment of income tax. Income tax in Ghana can range from 0 to 25 percent, and you need to be sure you are placed in the correct tax brackets. In order to be eligible for SSBI status an organization has to meet all conditions as set by the Dutch tax authorities. 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. The Wikimedia Foundation is ranked as the best NGO worldwide. 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. 1. All rights reserved. What is the cost of registering an NGO with Social Welfare? . In practice, these may include. poor girls are given the chance to attend University. Following from the foregoing, it is my humble opinion that the business income of a religious organisation is not subject to tax insofar as the income does not confer private benefit to individuals. Donation to religious organisations creates a 360 degree benefit for individuals. He added that NGOs also pay taxes and are checked by the Ghana Revenue Authority (GRA). Average salary in Ghana is 306,223 GHS per year. With passing time, there can be said to be a substantial increase in the activities of the Indian NGOs. they are socially, politically, economically educationally and even morally helpful to the country. Non-resident individuals pay taxes at the flat rate of 25%. 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. The intention of the tax law is to tax the business income of a charitable organisation. Employees of . On the flip side, the receipts of . The fact that the activities of Oxford University Press South Africa appeared commercial did not deprive Oxford University of its exemption from tax in respect of the proceeds from the business from South Africa What was important was that the income derived by Oxford University from its business in South Africa was fed into its educational purposes and was not for the private gain of individuals.. Non-governmental organizations (NGOs) are critical change agents in promoting economic growth, human rights and social progress. 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. 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. 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. partnership, trust or corporation) this obligation applies whether or not there is taxable income. From the foregoing, the objects of a religious organisation may include, but not limited to provision of services to, or conferring of benefits on an identifiable community or body or a section thereof with equal access to all intended beneficiaries without any particular individual(s) being the ultimate beneficiary(ies). An NGO is an exempt organization under the Act. 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? This article details everything you need to know about tax registration, tax rates, tax incentives, withholding taxes, income taxes, monthly tax filings, and audits in Ghana. The commitment to paying taxes is low. The church is required to withhold tax of US$30 on payments to the supplier and pay same to the Ghana Revenue Authority. (All goods and services exempt from VAT are also exempt from the NHIL and GETFund). The renovation is considered as works. c.The rental of premises for commercial purpose is considered as rent. Careers NHIL is at a flat rate of 2.5%; GETFund is at a flat rate of 2.5%. 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. Donation exceeding higher of: i) 5% of total donations received by trust or ii) Rs 1,00,000. With respect to resident persons, the income must be derived from, accrued in, brought into or received in Ghana. The operational NGOs, which primary concern is to develop projects and the advocacy NGOs whose major goal is to promote a cause. Lastly, the income that is being exempted should not confer private benefit. Taxable in the same manner as voluntary contributions (without specific direction) as above. LAASFUND was established in 2015. Signing up on Ghana.GOV. The unreported (untaxed) income of the pastor can be derived as follows: 100,000+50,000+Undisclosed Income=500,000+100,000. In Ghana, tax is deducted from an employees personal income at source through a pay-as-you-earn scheme. Such pernicious inequities in the tax burden have in the past contributed to smuggling in no small measure of exports. 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. b. 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. However, the practice notes issued by the CG regards activities of a religious organisation to be of public nature where, by its activities and operations, it, i.is open or accessible to the general public or a section of the public; and. 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. 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. : DSD/6634. As nonprofit entities, they also. Income of religious leaders and/or employees of religious organisations. The tax withheld must be filed and payment made by the 15, NGO as a Corporate Shareholder of a Company Limited by Shares, Annual General Meetings for Company Limited by Guarantee, A complete annual returns form from Registrar Generals Department. Treatment of an Honorarium as Employment Income. The government in 2001 initiated measures to rope into the tax net private consultants, lawyers and those in professional practice some of whom were not paying taxes on their income. Taxation is, by and large, the most important source of government revenue in nearly all countries. operation of commercial transport. To this end, the following sectors deserve the attention of the Internal Revenue Service (IRS): manufacturing (small and medium size firms), the hospitality enterprises, construction and transportation sectors, and professional service providers. There are two interpretations to this finding. Hence, you should know the various taxes to pay and the rates. They should be encouraged to complete annual tax returns and make quarterly payments towards tax revenues and for social security payments. For tax exemption purposes, a religious organisation must not engage in business the purpose of which is to make profit. Do NGOs pay taxes in Uganda? The normal response will be Of course!. What makes tax evasion by persons and businesses possible is that it is difficult to track through payroll records, most often inadequately kept, and it is difficult to assess profits from proprietary businesses. 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. Income derived by overseas shippers or charterers carrying passengers, livestock, mail or goods out of PNG is taxable in PNG. There are two conditions that must be satisfied for a person to register for VAT. The Registrar of Companies appears not to be enforcing the law. a. It specifically exempted religious bodies Catholic, Anglican, and Presbyterian Churches from paying duties on imported items. The income accruing to or derived by a charitable organisation is exempt from tax . Privacy Policy Penalty for late filing of tax returns are. 501 (c) (3) charitable nonprofit organizations typically are exempt from paying income and property taxes and donations to their work are deductible on federal and most state tax returns. The income of an individual may arise from sources including, i. Well, simply put it is because the assumption of an automatic tax free environment for NGOs is mistaken. To be on the safe side, do your due diligence and research extensively. A number of goods and services are exempt from VAT under the VAT Act, 2013 (Act 870) law (S. 15 Section 35/ Schedule 1). Be that as it may, the following are clear. iv. Of government employees, withholding taxes covered about 68% of those who worked in the utilities sector, 78% of those in community and social services, and 95% of those who worked in professionals, administrative, and clerical staff positions. Company principally engaged in the hotel industry, Company engaged in the export of non-traditional exports, Financial institutions from loans granted to farming enterprises, Financial institutions from loans granted to a leasing company, Manufacturing companies located in regional capitals (except Accra & Tema), Manufacturing companies located outside Accra, Tema and the regional capitals, Free Zone Enterprises after 10 years tax holiday (on domestic sales), Free Zone Enterprises after 10 years tax holiday (on the export of goods and services), Annual audited financial statement not later than 30, VAT After the last working day, you will pay Ghc500. If you enter only ghana.gov in your browser, you won't find the website. This is because such donations do not only benefit these organisations, but are also tax deductible for the donors in computing their chargeable income. An Non-Government Organisation,as we understand, is engaged with socio-economic activities catering to the needs of the general public at large and do not come under the ambit of the Income Tax Act, 1961. 35AC of the Act. Third, there is a fundamental issue of whether we are sharing the tax burden fairly? Supply of goods such as books, anointing oil, etc. E Plaza 2 Building, Accra, Ghana, P.O.BOX AN 16859, Accra North Ghana, Accra. As noted earlier, the degree of compliance varied greatly in the private sector. Advertisement. 2010 80G, 80GGA, 35AC(i& ii) and (i&iii) of the Act. My NGO engages in the production and sale of artefacts as a fund raising activity but auditors wants to classify that income as business income subject to tax. Initially it was exactly the scenario but with increase in unscrupulous practices these NGOs were made liable to pay tax and also allowed exemption. However, the interest or dividend accrued on such fund can also be utilized. It is actually the opposite. 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