do ngos pay tax in ghana
It is the employer's responsibility to file monthly tax returns on behalf of its employees. This resource describes the legal framework governing nonprofit organizations (also known as non-governmental organizations or NGOs) in Uganda, . This definition limited tax exemption to the Christian Church with regards to their income other than derived from business. Firstly, in terms of common law for a person to be seen as carrying on a business, it is generally understood that there must be a profit motive - and indeed, this approach was also previously reflected in the income tax legislation, which prior to July 2017 explicitly defined the term business to exclude activities that are conducted without a profit motive. In practice, these may include. A Guide to Tax Work for NGOs - International Budget Partnership But the big deal here is that you still have to pay them. Companies limited by guarantee including NGOs are exempted from paying corporate taxes. Includes transportation by bus and similar vehicles, train, boat and air. 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. 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. 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. Youth World Travel Organization (YWTO) is situated in Ghana. 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. Signing up on Ghana.GOV. This can be done where the operating vehicle is through the establishment of Trusts, for example. (All goods and services exempt from VAT are also exempt from the NHIL and GETFund). Box WJ 305, Ngleshie Amanfro Ghana Post GPS Code: GS0163-6020 Tel: +233 (0)30 290 8466/7 Email: info@gsma.gov.gh Some paid up, some negotiated to settle years of overdue taxes to avoid the dishonour of business closure. STEP 3 Complete Company limited by guarantee form 3B. 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. the objective of the organization is to bring assistance to humanity by supporting the material, sports, education, and well-being of the poor physically challenged and the less privileged in Ghana. This is the law on taxation of income currently in force. NGO staff receive a salary for the work they do. 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. The Bible says in Luke 11:28, , blessed are those hearing the word of God and keeping it. Ordinary meaning can, therefore, be given to the stream of income attributable to religious organisations that are exempt from tax. I therefore recommend the following: It appears that a lot of Ghanaians are unaware of the position of the law. The withheld tax must be paid to the Ghana Revenue Authority within 15 days following the month to which the payment relates. Taxable in the same manner as voluntary contributions (without specific direction) as above. It is, therefore, important for us as a country to know the position of the law and chart a way forward in creating an all-inclusive society that promotes fairness in honouring our tax obligations. This classification should, however, be distinguished from zero-rated supplies. 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. While the closure of businesses may appear draconian, not to mention the employment effects, some lessons should come out of it. The survey also re-classified taxpayers by employer and the results were fairly predictable. Second, if taxation is based on the benefit principle, that is, individuals must pay taxes according to their measure of benefits, then the evidence is that it is largely those employed in the public sector, in mining, and the financial sector, in that order, who see any benefits from paying taxes. This has come to strengthen my position.Thanks, Jonathan Casely Wiredu (FMVA,MSc,BCom,HND). It is actually the opposite. It is for the organisation, simpliciter. d.The procurement of food and drinks may constitute goods. This exclusion was removed in the Finance Act 2007 - and whilst arguably, one could still seek to rely on common law principles to insist on the need for a profit motive, it appears that this change was seeking to make such a motive unnecessary. Hse. It maintained the tax exemption status for religious organisations under Section . However, should the religious organisations operating vehicle be by way of for example Trust with individuals as ultimate beneficiaries, the business profits shall be taxable. 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. The highest income tax rate payable by an individual resident in Ghana is 25%. Therefore, where the income is to the benefit of a specific individual, that income is subject to tax unless generally exempt. A number of goods and services are exempt from VAT under the VAT Act, 2013 (Act 870) law (S. 15 Section 35/ Schedule 1). A deduction shall be disallowed for an expense that is of a capital nature. 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. The income accruing to or derived by a charitable organisation is exempt from tax . 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. This will help the efforts in bringing sanity in terms of the objects of religious organisations, how they operate, among others. The surplus income can be utilized to carry on with the activities towards the fulfillment of the objective of the particular NGO. The CG is, therefore, an administrative officer within the meaning of Article 23 of the Constitution, 1992. In the said case, the court held that the person whose liability to tax was being assessed was thus Oxford University, which the court held to be indubitably an educational institution of a public character. Annual income tax rates (Effective January 2022) , Monthly income tax rates (Effective January 2022) . iv. operation of a bookshop; and. Therefore, if we create a robust system where evidence of donations serves as a basis for deduction by individuals, it could make traceability of religious organisations income easier. BENEFITS AVAILABLE TO THE NGO & CONTRIBUTORS: An NGO by getting itself registered u/s. The pastor also travelled to the United Kingdom to preach in one of the branches of the church and received a gift equivalent to a value of US$50,000. However, the interest or dividend accrued on such fund can also be utilized. The least tax compliant were those who worked in occupations that involved service delivery, sales, transport and construction tradesmen. Can an NGO be converted into a Company Limited by Shares? NGOs are required to charge VAT on all taxable goods and services supplied and remit same to the FIRS as at when due. Accordingly, it is not surprising that it does create a fuss! Taxes in Ghana at a glance, but obsolete. 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. provision of services (such as hiring out of venues and facilities of the religious organisation); v.selling of in-house expertise to interested persons (e.g. All businesses are required to register with the Ghana Revenue Authority (GRA). The GST law specifically defines the term . This was in other to include more sports and youth development activities. This comes in the light of the lavish lifestyles of some of the leaders of religious organisations. By making donations to such NGOs, a business or corporate organisation can get a deduction of 175% on the donated amount as has been amended by the Finance Act, 2010 which was previously 125%. In order to be eligible for SSBI status an organization has to meet all conditions as set by the Dutch tax authorities. Unlike before, all companies limited by guarantee were excluded from Corporate Taxes and Value Added Tax (VAT). Careers Non-resident individuals pay taxes at the flat rate of 25%. Salaries, wages, overtime, leave pay, bonus, and similar employment income. publishing, and training); vi. gifts from church members in the United Kingdom, etc. 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. these are taxable services). 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. Furthermore, it will go a long way to help promote a charity sector geared towards their traditional role of helping the poor and needy whilst building the spiritual life of the people. 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. "However, before you are exempted from paying certain taxes, the individual must go to GRA with a. This organization is most concerned about the youths.it was set up in 2017 Informed Choice Foundation Ghana is a developing youth-headed Non-profit, a non-governmental organization in Ghana that works to empower the Ghana youths through access to information and to create a platform that will bring opportunities and grow the quality of life of young people. 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. Taxable supplies include sale of anointing oil, bottled water, consultancy services, rental of premises, training, sale of magazines, diaries, calendars, stationery, Bible, and Quran. 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