ii. A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. Consequent upon the above, it is advisable for the CG as part of assessing religious organisations to tax to determine the vehicle of operation of the religious organisation to form the basis of how to approach and determine the assessment. same must be subjected to withholding taxes. Income Tax Exemptions are the amounts that are reduced or removed from Income amounts because they are exempt from taxation. 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. What are the other tax obligations of NGOs? The income accruing to or derived by a charitable organisation is exempt from tax . The girls are placed in top corporations where they get work experience in their related areas during the summer breaks. The net amount due to the supplier is US$970. The first step in paying your business' taxes online from the comfort of your home or office is to visit the Ghana.GOV website. The purpose of the law with regards to the activities of religious organisations is to, among others, specifically empower the CG to approve an entity as a religious organisation, revoke the approval for a good cause or in contravention of the requirement of the law. Such tax cheating can be overcome (not eliminated) through sting operations and random audits. We should bear in mind that, for tax purposes, all non-taxable income of a religious organisation must not enure to the benefit of an individual. The Ghana Revenue Authority (GRA) is the government body mandated to collect and assess taxes. Are religious organisations required to pay taxes and/or comply with the tax laws of Ghana? 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. 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. This is good. Income Tax Exemptions are the amounts that are reduced or removed from Income amounts because they are exempt from taxation. The highest income tax rate payable by an individual resident in Ghana is 25%. Prevailing view in some circles is highly critical of such exercises as politically motivated. operation of commercial transport. On the flip side, the receipts of . The renovation is considered as works. Ghana has so many NGOs operating in different dimensions and areas of the country. Hips Charity Organisation Education is situated in Accra, Ghana. - 2023 PwC. b. It is, therefore, important for the Ghana Revenue Authority to develop training programme to educate all charitable organisations including religious organisations to ensure full compliance with the tax laws. Taxes in Ghana at a glance, but obsolete. Do your tax with TaxTim and WIN R10,000 T&C's apply. There are two interpretations to this finding. The intention of the tax law is to tax the business income of a charitable organisation. Redempta Maira is a Senior Manager, Tax Services at PwC. In Matthew 22:21, Jesus was asked by the Pharisees whether it is lawful to pay taxes to the emperor, or not. 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. Consumer and industrial products and services. ", Every person in Ghana (other than an individual who is not into business) is required to withhold tax on payments to resident and non-resident persons for the supply of goods, works and services unless exempt. First, personal income tax compliance is unevenly enforced across different sectors of the economy and by occupations. The programme should be segmented and tailored to meet the needs of each identifiable group for its effectiveness. And, any corresponding expenditure must relate to the purpose for which it was set up and approved by the CG. Nice Article. Of government employees, withholding taxes covered about 68% of those who worked in the utilities. ii. [Emphasis mine] Exempt organisation was defined in Section 94 to mean a person. Should you have any comments, you may send it by email, kwasi.nyantakyi.owiredu@gmail.com. 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. It maintained the tax exemption status for religious organisations under Section 3(1)(d) of the law. The survey sought to find out from the respondents about their profession, where they work, for whom they work, and whether taxes were deducted from their pay in the course of the survey period. Careers The Golden Opportunity Organization Ltd. is situated in Accra, Ghana. 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. Salary, allowances, facilities, pension and gratuity of the President; Income directly connected to the Government or local authorities activities; Income of a non-commercial public corporation; Gain from life insurance when the proceeds are paid by a resident insurer; The income of a non-resident person from a business that operates ships or aircraft, if the Commissioner-General is satisfied that an equivalent exemption is granted by that persons country of residence to persons resident in Ghana; A dividend paid to a resident company by another resident company when the company receiving the dividend controls at least 25% of the voting power in the company paying the dividend. 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. The income of an individual may arise from sources including, i. 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. In Ghana, tax is deducted from an employee's personal income at source through a 'pay-as-you-earn' scheme. After 14 years following the passage of the Income Tax Ordinance, then came the Income Tax Decree, 1975, S.M.C.D 5. In terms of donor funding, in the current world that we are in, every penny of the donor must be accounted for. 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. Historical Antecedents of Taxation of Religious Organisations in Ghana. Anonymous donation received by a trust established wholly for religious and charitable purpose on. NHIL and GETFund shall apply with the necessary modifications as may be required by law. Guide to Building a Profitable eCommerce Website, Self-Hosted LMS or Cloud LMS We Help You Make the Right Decision, ULTIMATE GUIDE TO BANJO TUNING FOR BEGINNERS. Overseas Shipper Tax. Mining firms thus appear to be more compliant with payroll deduction than other industries that operated in the economy in the nineties. What concerns us now is the degree of compliance. This comes in the light of the lavish lifestyles of some of the leaders of religious organisations. The Wikimedia Foundation is ranked as the best NGO worldwide. Do non-profit/ non-governmental organisations (NGOs) deserve a special tax regime? Condition of Use According to the most recent estimates from the International Centre for Tax and Development, total tax revenues account for more than 80% of total government revenue in about half of the countries in the world - and more than 50% in almost every country. BECAUSE, THE LABOURERS I WILL ENGAGE THIS WEEK ARE NOT THE SAME LABOURERS I WILL ENGAGE NEXT WEEK. They equally have a license Certificate to Operate their Headquarters from Accra Metropolitan Assembly of Jurisdiction with Reg. One of the most consistently challenging aspects of contracting in Namibia is complying with the country's tax system. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Congratulations! 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. Machinery, apparatus, appliances and parts thereof, designed for use in. Incidentally, even if there is no taxable income this does not negate the requirement to file an income tax return. 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. 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. Therefore, where the income is to the benefit of a specific individual, that income is subject to tax unless generally exempt. Initially it was exactly the scenario but with increase in unscrupulous practices these NGOs were made liable to pay tax and also allowed exemption. Construction and renovation of church premises. Disclaimer of Warranty, About Us Companies limited by guarantee including NGOs are exempted from paying corporate taxes. NGO staff receive a salary for the work they do. Under Section 10(1)(d) of Act 592, it was provided that the income accruing to or derived by an exempt organisation other than income from any business is exempt from income tax. BUT WHY SHOULD I PAY PAYE FOR WAGES? On the assumption that the pastor had already paid income tax in Ghana on his employment income and gift he received in the UK, he should also pay income tax on his undisclosed income of US$450,000. The surplus can either be carried forward to the succeeding years without any kind of limitation or accumulated for a specific purpose. c.Provision of services such as training, or consultancy. Calculating taxes can be tedious, even more so if you are not sure about the rates and percentages. Pay processing fee of GHS270.00 at the in-house bank or via Online. Individual Donors for Education - Funding Grants for NGOs - Children's Homes - Orphanage Funding and Support - Click Here! Though educational institution is excluded from tax-exempt organisation under Act 896, religious institution remains. In order to be eligible for SSBI status an organization has to meet all conditions as set by the Dutch tax authorities. The supply of educational services at any level by an educational establishment approved by the Minister for Education. Non-Governmental Organizations (NGOs) play a vital role in the process of social and economic development of the economy. 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. Concept of NGO and Income Tax Provisions. The exercise turned out surprising results. c.The rental of premises for commercial purpose is considered as rent. The CG is appointed by the President in compliance with section 13(1) of the Ghana Revenue Authority Act, 2009, Act 791. 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]. These are: a. "However, before you are exempted from paying certain taxes, the individual must go to GRA with a. 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? All businesses registering with the GRA, must do so at the nearest GRA district office closest to the project location. Widening and deepening compliance with payroll deductions (for both taxes and pension contributions) is easiest and cost-effective to administer. Roger Federer. In Ghana, tax is deducted from an employee's personal income at source through a 'pay-as-you-earn' scheme. Includes transportation by bus and similar vehicles, train, boat and air. The entity has a written constitution that prohibits that entity from, i.engaging in a party political activity, supporting a political party or using its platform to engage in party politics, ii. The questions I seek to address in this contribution are as follows: a. The highest income tax rate payable by an individual resident in Ghana is 25%. Antoa) and the like on all fours. This has come to strengthen my position.Thanks, Jonathan Casely Wiredu (FMVA,MSc,BCom,HND). It is so with the collection of consumption (the value added) tax. Non-resident individuals pay taxes at the flat rate of 25%. 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. Religious organisations and their leaders have come under intense scrutiny in recent times from the public as to whether or not their incomes should be subjected to tax. (NGO Act Section 46 (1)). Given our history in the early 1980s, such cynicism is understandable. Any excess revenue (surplus) remaining after all the expenditures of a religious organisation in any year has to be retained and applied in the future to the companys purposes. Condition of Use He is required by Article 23 of the Constitution 1992 to comply with the requirements imposed on him by Section 1(1) of Act 915 to administer and give effect to the tax laws of Ghana. An expense that is of a capital nature includes an expense that secures a benefit that lasts for more than twelve (12) months. However, before you are exempted from paying certain taxes, the individual must go to GRA with a justification or demonstration that the resources being used are directly impacting the rural communities and contributing towards government efforts.. The person must make taxable supplies; and. A resident of India having a taxable income and a non-resident having an Indian passport can claim for benefits if they have made a donation to an NGO which is registered with the Income Tax Department and holds tax exemption status u/s. These are: b. The predefined criteria include being a resident entity of public character that is established for relief of poverty or distress of the public, advancement of education, or provision of general public health, education, water or road construction or maintenance. 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. The following are important to take note of, one of legal frameworks governing the NGO sector is the Income Tax Act 1997. In Ghana, tax is deducted from an employees personal income at source through a pay-as-you-earn scheme. Hse. Do note that whilst it's branded as Ghana.GOV, the actual url is ghana.gov.gh. Ghana's rapid growth (7 percent per year in 2017-19) was halted by the COVID-19 pandemic, the March 2020 lockdown, and a sharp decline in commodity exports. 10, Plot 48, Osu Badu Road/Broadway, Accra, Ghana. The TCCs serve as tax credits towards annual tax payable. Admittedly these numbers only point to the extent of enforcement of payroll taxes. This will help the efforts in bringing sanity in terms of the objects of religious organisations, how they operate, among others. A large segment of those engaged in service delivery and construction, and in distributive trade and commerce, were noted as the least likely groups to have taxes deducted from their earnings at source. Other donations to the church amounted to US$800,000. This will not only improve upon the revenue generation of the government, but will also ensure equity in the tax system. This is because such donations do not only benefit these organisations, but are also tax deductible for the donors in computing their chargeable income. Pay as You Earn (PAYE): The law exempts NGOs as an entity from paying taxes on non-profit related income as explained above. Taxable supplies include sale of anointing oil, bottled water, consultancy services, rental of premises, training, sale of magazines, diaries, calendars, stationery, Bible, and Quran. Some tax laws are complex, not easily understood. 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. 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 person or organization will get a deduction of 50% of donation amount from the Taxable Income. She explained that this is because donors conduct quarterly monitoring of the various communities to be worked on to check if the NGOs are doing the work the grants given to them are meant for. Considering the enormous powers of the CG, if he fails to enforce the law, who should we blame? From the historical analysis above, there are key underlying themes running through all the various tax dispensations. Please feel free to contact us for your Customs classifications and validation, Copyright Notice 4. A church intends having its 20th Anniversary and the Planning Committee has outlined the following programme of expenditure and the costs are payable in the month of August 2018: a. The CG has issued practice notes to serve as a guide in the implementation of the law in this regard. 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. 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 Company is working in Secretarial Services, Associations business activities. Instead, when the NGO has met the predefined criteria and has a ruling to be recognised as a charitable organisation, then it will be granted an additional tax deduction equal to 25% of its income. The church is required to withhold tax of US$30 on payments to the supplier and pay same to the Ghana Revenue Authority. The rate for the withholding of the taxes depends upon the nature of transaction and residency of the supplier. As was said by Ms Sophia Akuffo, JSC (as she then was), in the case of Atta Barfour v Tema Development Corporation, it is a basic principle that equity aids the vigilant and not the indolent. Therefore, where the Ghana Revenue Authority continues to sit and watch, and fail to enforce the law, it cannot put blame on the religious fraternity. LAASFUND was established in 2015. So why the fuss about taxation of NGOs? 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. any function other than those that the entity is established to operate; and, iii. No. Status as Religious Organisation for income tax purposes. Conditions. 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. . An honorarium, alongside other related expenses, is reported as taxable income using Form 1040 of IRS Schedule C. Related expenses may, for example, range from an air ticket to the . i. National Disaster Management Organisation (NADMO) is situated in Accra, Ghana. Customs Preventive Officers check the documents, and then release the goods. these are taxable services). But, he's put the right spin on his tax situation by . To fund development, especially public infrastructure, with any stamp of country ownership and unburdened by donor conditionalities, requires that Ghana strengthens its ability to raise domestic tax revenue; however small. Who or that is and functions as a religious organisation of a public character ; b. A provisional tax assessment is raised on all businesses yearly, including new business registrations. Partners in Health, Oxfam, BRAC, International Rescue Committee, PATH, CARE International, Mdecins Sans Frontires, Danish Refugee Council and Ushahidi make up the top ten. 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. This combination undermines the growth of domestic revenues. The salary in NGOs are totally depends on NGOs income and investments. But the big deal here is that you still have to pay them. The accounts of religious organisations must, among others, capture all receipts and payments for each year, and a statement of financial position of the company or trust, as the case may be. Any additional day is Gh, Income tax After each quarter (March, June, September, December), you pay Gh, Annual financial statements After the last working day of April, you will pay Gh, Copies of payment receipts for general and operational expenses, Custom import documents as evidence for importation, VAT invoices must agree with the Monthly VAT filings, Monthly VAT filings must agree with the reported Annual turnover figure in the financial statement. Tax benefits. These include: Restraint of individuals by acting in concert with Ghana Immigration Service to prevent travel without paying taxes due, Recovery through agents of non-residents; and. All rights reserved. Charitable or Religious trusts are constituted to promote the welfare of public and hence, Income tax law provides exemptions to any income derived from property held under such trusts if it is not misused or diverted to non-charitable objects. ii. However the DTC proposes for the utilization of the 15% of the surplus or 10% of the receipts within three years in order to restrain the accumulation for a longer period and in such case where the surplus is not utilized it shall become taxable at a rate of 15%. it was established and registered in December 2001 with the Registrar Generals Department and the Department of Social Welfare. Corporate tax is the tax imposed on the net income of the company, in other words, it is a levy placed on the profit of a firm to raise taxes. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Taxes for Companies Limited by Guarantee in Ghana. 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. Youth World Travel Organization (YWTO) is situated in Ghana. SSBI's are not required to pay gift or inheritance taxes, as long as they apply for exemptions thereof by filing their gift taxes. The church is required to withhold tax of US$250 on payments to the supplier and pay same to the Ghana Revenue Authority. The granting, assignment or surrender of an interest in land or buildings intended to be used for the purpose of dwelling; the right to occupy land or buildings excluding hotel accommodation, warehousing, storage and similar occupancy incidental to the provision of the related services. 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. This appears not to be the case now. It specifically exempted religious bodies Catholic, Anglican, and Presbyterian Churches from paying duties on imported items. Under Act 896, there are 3 key conditions that must be satisfied by a religious organisation to qualify for exemption from income tax. 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. 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 questions begging for answers are as follows: Was the income disclosed to the Ghana Revenue Authority? Treatment of an Honorarium as Employment Income. The economic slowdown had a considerable impact on households. Financial Statement for the year of filling. 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. VAT is applicable on all taxable supply of goods and services provided in, and imported into Ghana unless exempt. All businesses are required to register with the Ghana Revenue Authority (GRA). Lastly, the income that is being exempted should not confer private benefit. What is the withholding tax obligation of the Church? Firstly, whilst it is true that in certain cases NGOs will have relief from income tax on the NGO entity itself, and from certain indirect taxes, any such relief is normally subject to conditions. This article is written by Amrita Basu, a student of New Law College, Bharati Vidyapeeth (Deemed) University, Pune. 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. NGOs play a pivotal role in our society. Of every 100 workers in these occupations, about 93, 86 and 85, in that order, had taxes deducted from pay at source. Individuals are taxed based upon their income from employment, business and investment. Exempt amounts include: Salary, allowances, facilities, pension and gratuity of the President; Income directly connected to the Government or local authorities' activities; 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. It should be noted that in a situation where the assets are in the name of the church but are being used for the personal benefit of the pastor, the collateral benefit or benefit in kind should be assessed to tax in the hands of the pastor as required by law. See you there. 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. For domestic transactions, examples include, works (5%); goods (3%); services (7.5%); etc. I smashed Major Mahamas head with a cement block Accused person tells court, How Bagbin ordered two NDC MPs to retract anti-Jean Mensa submissions, Bola Ahmed Tinubu: 10 key points about the Lagos 'landlord' set to lead Nigeria, Im a wizard Kyiri Abosom concedes as Delay bombards him with questions, Meet the late Ndebugre's son eyeing Zebilla constituency seat, Ablakwa vs. Rev. They are also non-profit organizations. With the above settled, the next question of interest is: what are the sources of income of the pastor that enabled him to buy the vehicles, house and shares? In many countries, NGOs are exempt from paying state and federal taxes. NGOs are required to charge VAT on all taxable goods and services supplied and remit same to the FIRS as at when due. 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. 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. U/S. The poverty rate is estimated to have slightly increased from 25 percent in 2019 to 25.5 percent in 2020. It is the employer's responsibility to file monthly tax returns on behalf of its employees. 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.
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