Income subject to Tax under the Tax Law, a. At a glance, it may appear a lot of our religious organisations whose activities fall within the above-mentioned conditions for VAT registration may not have registered with the Ghana Revenue Authority. 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. Calculating taxes can be tedious, even more so if you are not sure about the rates and percentages. The School is not into the business of rental of commercial premises. Policymakers regularly review and propose . 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. There are increased calls from the public for regulation of the sector. To be on the safe side, do your due diligence and research extensively. Whether you're a contractor or a permanent employee, you have to pay tax on all of your earnings whilst you're in the country. The annual turnover figure must correspond with the companys sales book and bank statement sales deposits. Jesus responded Render unto Caesar the things that are Caesar's, and unto God the things that are God's. The official fee for registering a company limited by guarantee with the Department of Social Welfare is 1,200 for local NGOs and $1,200 for foreign NGOs who have their branches registered in Ghana. The highest income tax rate payable by an individual resident in Ghana is 25%. their aim was to provide an umbrella for the physically challenged, destitute, and less privileged youths in Ghana through activities like sports, education, healthcare and the art of helping one another. 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. Do note that whilst it's branded as Ghana.GOV, the actual url is ghana.gov.gh. This is in compliance with Section 124 of Act 896. There is no reason to believe that the individuals who did not have taxes deducted at source are inherently non-tax complaint. 35AC of the Act. Procedures for registering a company limited by guarantee (Not-for-profit / NGO). Company is working in Associations business activities. 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. An NGO is an exempt organization under the Act. 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. So far as income tax is concerned, in many cases the law will at a practical level normally result in an NGO not having an income tax liability. Justice Oliver Wendal Holmes (US Supreme Court 1841-1935), once said that taxes are the price we pay for a civilized society. The withheld tax must be paid to the Ghana Revenue Authority within 15 days following the month to which the payment relates. Mining firms thus appear to be more compliant with payroll deduction than other industries that operated in the economy in the nineties. 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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. In Ghana, tax is deducted from an employee's personal income at source through a 'pay-as-you-earn' scheme. Of every 100 workers in these occupations, about 93, 86 and 85, in that order, had taxes deducted from pay at source. The NGO also functions in some areas of West Africa as follows: Benin, Burkina Faso, Liberia, Nigeria, and Sierra Leone. Any other excisable product prescribed by the Finance Minister. G31, G-Line, Patase Estate, Kumasi, Ghana. 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]. 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. Value Added Tax (VAT), National Health Insurance Levy (NHIL), and Ghana Education Trust Fund Levy (GETFund). And political interpretation of the exercise only further calls attention to those who are most affected and their aversion to comply with tax laws. So, if at a practical level an NGO is treated as deriving business income (being the funding it receives), how does the law then ensure that the NGO is not taxed on these receipts. This classification should, however, be distinguished from zero-rated supplies. i.tithes and offering amounted to US$600,000. Any NGO, fund or institution established in India for a charitable purpose and fulfils the conditions laid down u/s.80G. 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. For Individual Support and Sponsorship Use Contact Form. And to achieve that, the tax burden must be shared equitably on the basis of ability to pay. In the case of Attorney of Hong-Kong v Reid, [1993] the court said a principal ought to have the right to trace and to follow a bribe or secret commission It can therefore be construed that, however an income is earned, once it is taxable, the Ghana Revenue Authority can tax same. Third, there is a fundamental issue of whether we are sharing the tax burden fairly? First, personal income tax compliance is unevenly enforced across different sectors of the economy and by occupations. 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). Therefore, the applicable withholding tax rate is 3%. It maintained the tax exemption status for religious organisations under Section . Accordingly, it is not surprising that it does create a fuss! BUT WHY SHOULD I PAY PAYE FOR WAGES? PAYE is computed with the personal income tax rates. There are two interpretations to this finding. 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. Brochure or publication about your organization. NGO staff receive a salary for the work they do. This organization is a registered Non Governmental organization. However, obtaining the charitable status does not amount to income tax exemptions. Therefore, a religious organisation registered as such with the Registrar of Companies is separate from the founder(s), religious leaders, or employees of the company. Taxable supplies include sale of anointing oil, bottled water, consultancy services, rental of premises, training, sale of magazines, diaries, calendars, stationery, Bible, and Quran. 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. iii. ii. A summary of the goods and services which are exempt from VAT/NHIL and GETFund include: This classification includes all live animals such as cattle, sheep, goats, swine and poultry, but excludes horses, asses, mules, hinnies and similar exotic animals. But NGOs said the UK, whose overseas territories amount to a third of the world's tax havens, is in a unique position to do much more. The World Bank grouped NGOs into two. Historical Antecedents of Taxation of Religious Organisations in Ghana. Laboratory equipment for educational purposes and library equipment. The Golden Opportunity Organization Ltd. is situated in Accra, Ghana. Some paid up, some negotiated to settle years of overdue taxes to avoid the dishonour of business closure. Section 10(2) of Act 179 goes on to provide for sanction for officers, members of the company and the company itself should it carry out activities for the purpose of making profit. Taxes for Companies Limited by Guarantee in Ghana. The question is: whether or not a religious organisation is required to register for the VAT? Ghana Quality Organization is situated in Accra, Ghana. I say so because, how many of our religious organisations file their annual returns with the Registrar of Companies? However, contemporary rates are depending on the nature of business carried out by an entity, the location of the business and the specific industry in which it operates. The highest income tax rate payable by an individual resident in Ghana is 25%. It provided as follows: there shall be exempted from tax the income of an ecclesiastical, charitable of a public character insofar as such income is not derived from trade or business carried on by such institution [Emphasis mine]. This button displays the currently selected search type. 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