Taxes – a word that can make even the most confident Ghanaian entrepreneur break into a cold sweat. But don’t worry, we are here to help. In this article, we will simplify the basics of small business tax in Ghana and equip you with the knowledge you need to navigate your tax obligations with confidence.
Do Small Businesses Pay Tax in Ghana?
Yes, they do! Everyone, from sole proprietors and informal traders to partnerships and large companies, is required to pay taxes to the government.
In fact, after officially registering your business name with the Registrar-General’s Department, you must also register with the Ghana Revenue Authority (GRA) before engaging in any taxable activity.
Neglecting to register for taxes can lead to penalties, court summons, and even imprisonment in serious cases.
Now that you understand the importance of tax compliance, let’s explore the bodies responsible for collecting taxes from small businesses in Ghana.
Where Do I Pay My Small Business Tax in Ghana
As a business owner in Ghana, understanding the different tax authorities and their roles will help you and your business stay compliant with the government.
Let’s delve into the key players you’ll encounter as a taxpayer in Ghana:
The Ghana Revenue Authority (GRA)
The Ghana Revenue Authority (GRA) is the central body responsible for overseeing the collection and assessment of taxes in Ghana. They are responsible for monitoring, collecting, assessing taxes, and ensuring everyone follows Ghana’s tax laws.
The GRA operates through two main divisions: The Domestic Tax Revenue Division (DTRD) and the Customs Division (CD). They are also assisted by the Support Services Division (SSD) and the Commissioner General’s Secretariat.
The Domestic Tax Revenue Division (DTRD) shoulders the responsibility of managing and collecting all domestic taxes. This involves identifying taxpayers, assessing their tax obligations, and collecting the appropriate taxes and levies based on their income and business activities.
The DTRD also organises taxpayers into two groups, known as “offices,” based on their annual turnover: Large Taxpayers and Small/Medium Taxpayers.
Some of the key taxes handled by the DTRD include Income Tax, Withholding tax, Capital Gains Tax, Gift Tax, Value Added Tax (VAT), etc.
The Customs Division (CD) on the other hand plays a crucial role in mobilizing revenue through import and export activities. This involves facilitating legitimate trade while ensuring public security and safety. They can be found at all entry and exit points, including harbours, airports, land borders, and parcel post facilities across Ghana.
Depending on your location within Ghana, you may encounter additional tax authorities known as Metropolitan, Municipal and District Assemblies (MMDAs). These local government bodies are responsible for collecting specific taxes like property rates, business operating licenses, market tolls, etc.
Types of Business Tax in Ghana
Small businesses are subject to different types of taxes at different rates depending on the type of tax, the nature of your business, the location of the business, and the specific industry in which it operates. There also isn’t a defined small business tax rate in Ghana.
However, business owners in Ghana pay 2 types of taxes: direct and indirect. Direct taxes are levied on your income or profit, while indirect taxes are added to the goods and services you provide.
Here are the 6 taxes you are most likely to pay as a business owner in Ghana:
Corporate Income Tax (CIT)
If you’re running a company in Ghana, whether incorporated locally or operating as a non-resident business, Corporate Income Tax (CIT) applies to you.
CIT also applies to specific types of organizations, including friendly societies, building societies, and partnerships with limited liability partners.
The standard CIT rate in Ghana is 25%. However, businesses in the extractive sector, such as mining and petroleum, are generally taxed at a higher rate of 35%.
There are also opportunities for reduced rates depending on your industry or location. For example, young entrepreneurs in specific sectors like manufacturing, technology, and agro-processing enjoy a special rate of 1% for their first five years.
CIT is payable in four equal instalments, due at the end of each quarter: March 31st, June 30th, September 30th, and December 31st.
Here’s a breakdown of the CIT rates for different types of companies:
| Company Type | Tax Rate (%) |
| Non-traditional exporters | 8 |
| Mining and upstream petroleum companies | 35 |
| Companies in the hotel industry | 22 |
| Trusts | 25 |
| Financial institutions (loans to farms) | 20 |
| Financial institutions (loans to leasing companies) | 20 |
| Lottery operators | 20 |
| Manufacturing companies in regional capitals (except Accra & Tema) | 18.5 |
| Manufacturing companies outside Accra, Tema and the regional capitals | 12.5 |
| Free Zone Enterprises after 10 years tax holiday (on domestic sales) | 25 |
| Free Zone Enterprises after 10 years tax holiday (on export of goods and services) | 15 |
Personal Income Tax (PIT)
Personal Income Tax (PIT) applies to the profits and gains earned by business owners, partners, and sole proprietors in Ghana. Your business income includes:
- Service fees earned during the year.
- Income received from trading stock.
- Profits from selling business assets.
- Payments received for restricting your business activities.
- Gifts related to your business.
- Any income directly connected to your business that would otherwise be considered investment income.
If your monthly income exceeds GH¢402 and your business falls outside the informal sector, you are liable to pay PIT. The tax rate varies based on your income, with a maximum rate of 30%.
Here’s a breakdown of monthly Personal Income Tax rates in Ghana:
| Chargeable income (GHS) | Rate of tax (%) |
| 402 and below | 0 |
| Next 110 | 5 |
| Next 130 | 10 |
| Next 3,000 | 17.5 |
| Next 16,395.00 | 25.0 |
| Next 29,963 | 30.0 |
| Over 50,000 | 35.0 |
| Non-residents | 25 (flat-rate) |
Value Added Tax (VAT)
Value Added Tax (VAT) is a tax levied on the sale of goods and services in Ghana. It is a small amount added to the final price of a product or service, which you as a business owner collect and remit to the Ghana Revenue Authority (GRA).
You can think of it as a contribution shared throughout the production and distribution chain, with each step adding a bit to the final tax. That’s why it’s called a multi-stage tax.
However, some goods and services are exempt from tax, including:
- Live animals
- Goods for the disabled
- Educational materials and services
- Medical supplies and services (pharmaceuticals)
- Transportation services
- Machinery
- Crude oil and hydrocarbon products
- Land, buildings, and construction materials
The standard VAT rate in Ghana is 15%. However, there are specific rates for certain businesses and exempt goods. Here’s a breakdown of the VAT tax rate charged to retailers in Ghana:
| Value | Rate (%) |
| Retailers of taxable goods with an annual turnover between GHS 200,000 – GHS 500,000 | 3 |
| Retailers of taxable goods with an annual turnover between GHS 500,000 | 15 |
| Exported supplies and other designated supplies | 0 |
By law, you must register for VAT and integrate your business with the GRA’s Certified Invoicing System (CIS) if your annual turnover exceeds GHS 200,000. This way, you can issue proper tax invoices and collect VAT on behalf of the government.
Businesses must also submit their VAT returns and make payments to the GRA by the last working day of the month following the reporting period. For instance, October VAT returns are due by the last working day in November.
Before we move on to other business taxes in Ghana, it’s important to note that:
- Goods and services exempt from VAT are also exempt from the NHIL and GETFund levies.
- Goods taxed at the 3% rate are not subject to NHIL and GETFund but are subject to the COVID-19 HRL.
- Zero-rated VAT items also have zero-rated GETFund, NHIL Levy, and COVID-19 HRL.
- VAT-registered businesses must file separate NHIL, COVID, and GETFund returns on the same date as their VAT returns.
National Health Insurance Levy (NHIL)
Similar to Value Added Tax (VAT), the National Health Insurance Levy (NHIL) is a tax added to the price of goods and services in Ghana.
The NHIL tax rate in Ghana is set at 2.5% and it plays a vital role in supporting the National Health Insurance Scheme (NHIS), which provides affordable healthcare access to all Ghanaian residents.
The NHIL follows similar rules and procedures as the VAT. This means that goods exempt from VAT are automatically exempt from NHIL. Additionally, retailers with an annual turnover between GHS 200,000 and GHS 500,000 are exempt from both NHIL and VAT.
Covid -19 Health Recovery Levy (COVID-19 HRL)
The COVID-19 Health Recovery Levy (HRL) is a special tax implemented by the Ghanaian government to support the nation’s recovery from the COVID-19 pandemic.
The COVID-19 HRL tax is imposed on the supply of goods and services, and imports of goods and services into Ghana. It is charged at a rate of 1%, and goods exempt from VAT are also exempt from this levy.
However, all businesses, including those enjoying a 3% VAT rate (Retailers with an annual turnover between GHS 200,000 – GHS 500,000), are required to charge the HRL.
Ghana Education Trust Fund Levy (GETFL)
The Ghana Education Trust Fund Levy (GETFL) is a tax levied on the supply of goods and services in Ghana to support the development and delivery of quality education at all levels. Similar to the NHIL tax, it is charged at a rate of 2.5%.
The GETFL tax follows the rules of VAT, so goods that are exempt from VAT are not charged the GETFL tax. Also, businesses with annual turnovers between GHS 200,000 and GHS 500,000 are exempt from GETFL.
Income Tax Stamp
The Income Tax Stamp is specifically designed for individuals operating in the informal sector.
So, instead of paying traditional income tax, businesses in these categories are required to purchase and display an Income Tax Stamp:
- Small-scale dressmakers/tailors
- Hairdressers/beauticians/barbers
- Susu collectors
- Chop bar owners
- Cooked food sellers
- Butchers
- Container/kiosk/tabletop operators
- Garage owners
- Artisans (masons, carpenters, welders, mechanics, vulcanizers, electricians, sprayers)
- Hawkers
- Market traders
If your business falls under the categories listed above, simply visit any Taxpayer Service Centres (TSCs) near you to buy and register for an Income Tax stamp.
Tax Requirements for Businesses in Ghana
Paying your taxes in Ghana is straightforward, but the specific requirements vary depending on your location, business type, and annual turnover. Here’s a general overview of what you’ll need:
- Organisation Tax Identification Number:
Every business liable to pay taxes in Ghana requires a unique TIN. This serves as your official identification for tax purposes and is mandatory for various business activities.
Businesses required to register with the Registrar General’s Department (RGD) are also required to obtain a TIN. These include:
- Business Names
- Companies Limited by Shares (including subsidiaries)
- Companies Limited by Guarantee
- External Companies
- Partnerships
- Subsidiary Business Names
Fortunately, a dedicated TIN Centre operates within the Registrar General Department’s premises. This means you can register your business and obtain your TIN simultaneously.
Apart from your TIN, you must provide supplementary documents during the registration process.
These typically include:
- Certificate of Incorporation or Business Registration: Proof of your business’s existence.
- Ghana Card of Business Owner(s)/Director(s).
- Business Location Details: The physical address of your business operations.
- Financial Statements: Documents like bank statements and sales records to demonstrate your financial standing.
- Certificate to Commence Business: Authorization from relevant authorities to operate your business.
How to pay taxes as a small business in Ghana
You can choose to pay your small business tax in 3 ways: the GRA portal, the GRA mobile app (IOS and Android), or your nearest Taxpayer Service Centre (TSC).
The specific process and required documents vary based on the tax type. However, there’s a general step-by-step guide to help you navigate the process:
- Register as a Taxpayer
This is a straightforward process. Simply:
- Visit any TSC to register and receive your organizational tax identification number (TIN).
- Provide documents related to business I.e certificate to commence business, etc.
- If you are already a registered taxpayer, you can apply for a tax type to be added to your account.
- Determine Your Tax Obligations
This is when you figure out the taxes that apply to your business. You can do this by:
- Consulting the GRA staff at the TSC for the taxes applicable to your business.
- Researching and claiming any available reliefs and exemptions as they can significantly reduce your tax burden.
- File Annual Tax Returns
Every registered company must file their annual returns electronically through the Taxpayer’s Portal or physically at any DTRD Taxpayer Service Center. Simply ensure you:
- File it before the deadline for the tax you are paying.
- Generate a tax bill from the Taxpayers portal for the tax type you have filed.
- Submit Estimated Self-assessment
In addition to annual returns, companies must submit an estimated self-assessment before the deadline.
- Make Payment
Use the generated bill to pay your taxes through:
- The Ghanaian Revenue Authority (GRA) Taxpayer’s Portal
- Any DTRD office near you
Conclusion
Paying taxes is a fundamental responsibility of every business in Ghana. While the process may seem complex at first glance, understanding the different types of taxes, registration requirements, and available resources can help you navigate the system with ease.
You can visit the GRA website anytime to understand your tax requirements, file taxes, and access useful resources. You can also seek guidance from any GRA staff at Taxpayer Service Centers or a qualified tax advisor.