Sympathy International is owned and managed by a Ghanaian-owned Non- Governmental Organization (N.G.O). After 14 years following the passage of the Income Tax Ordinance, then came the Income Tax Decree, 1975, S.M.C.D 5. One of the new activities included was skate soccer and also beach soccer. b. There are two interpretations to this finding. Ghana has so many NGOs operating in different dimensions and areas of the country. : DSD/6634. A religious organisation that seeks the approval of the CG for tax exemption must have a written constitution with express provisions that prohibit it from: i.engaging in a political party activity, supporting a political party or using its platform to engage in party politics; ii. they are socially, politically, economically educationally and even morally helpful to the country. That is to say, where business is carried out incidental to its purpose as a religious organisation Limited by Guarantee, or Trust (with no ultimate private benefit to individuals), the profit is exempt from tax, simpliciter. The irony is that, for most donor countries, direct taxes (personal and corporate income taxes) remain the workhorse of the tax system and help to finance aid. 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 church is, therefore, required to withhold tax of US$300 on payments to the School and pay same to the Ghana Revenue Authority. Lets take a hypothetical illustration below to ascertain how the income of a religious leader (such as a pastor) should be taxed. So if anybody is sitting somewhere thinking that you can pocket an NGOs money, spend it and marry more wives, try it, she cautioned. 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. This is in compliance with Section 124 of Act 896. the name was changed in 2007 to Sports and Youth Development Organization Ghana. 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. 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. (It must be proved and signed by directors of the company at the Annual General Meeting of the company). The tax is calculated on a deemed taxable income equal to 5% of the gross income, which is taxable at the nonresident rate of 48% in the case of companies. 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. 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%. In the case of Mould v. De Vine, Jiagge S. (as she then was) wrote, There was no alternative remedy available to the applicant. G31, G-Line, Patase Estate, Kumasi, Ghana. The exercise turned out surprising results. First and foremost, the type of organisation should be religious in nature. Signing up on Ghana.GOV. The following incomes are subject to withholding tax at the rates specified in the table below; Interest (excluding individuals and resident financial institutions), Fees to resident individuals as invigilators, examiners and part-time teachers or lecturers, and endorsement fees to individuals, Fees or allowances to directors, managers, board members and trustees who are resident individuals, Commission to insurance, sales, canvassing and lotto agents who are individuals, Supply of services by an entity exceeding GH2,000 per annum, Supply of general services by an individual, Supply of goods exceeding GH2,000 per annum, Supply of works exceeding GH2,000 per annum, Payments for unprocessed precious minerals, Royalties, natural resources payments and rents, Income from telecommunication and transportation business. 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%. 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. 12A of the Act within a year from the date of its establishment can avail exemption from the payment of tax u/s.11 of the Act. Save my name, email, and website in this browser for the next time I comment. The learned judge also referred to the South African case of Chancellor, Master and Scholars of the University of Oxfordv. Commissioner for Inland Revenue, Republic of South Africa to support his position. v.From the facts, the aggregate cost incurred by the pastor in buying the vehicle, house and shares is US$600,000 [500k+100k]. With the above set of facts, it is clear that the total of the monies used to buy the vehicles, house and shares exceeds the pastors employment income. The GST law specifically defines the term . Lastly, the income that is being exempted should not confer private benefit. The questions I seek to address in this contribution are as follows: a. 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]. You can click on this link and join: https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA. Treatment of an Honorarium as Employment Income. In 2017, the annual income generated by a church from. Antoa) and the like on all fours. Regional Coordinating Council, Ministries, Accra, Ghana. 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 . A Guide to Tax Work for NGOs - International Budget Partnership The Registrar of Companies appears not to be enforcing the law. (All goods and services exempt from VAT are also exempt from the NHIL and GETFund). It is the employer's responsibility to file monthly tax returns on behalf of its employees. 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. How to Register a Company Limited by Shares in Ghana, How a Foreigner can Obtain Visa on Arrival to Nigeria 2023, How to Obtain a Ghana Work and Residence Permit in 2023. do ngos pay tax in ghana dezembro 21, 2020 3:38 am Publicado por Deixe um comentrio. The NGOs which cannot generate their own income are completely depends on funders to pay their employer cost. iv. It must be pointed out that educational institutions and religious institutions under enactments in Ghana prior to the year 2016 were considered as exempt organisations for tax purposes. The exercise led to the shutdown of a number of tax delinquent companies. 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. 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. Therefore it cant be implied from the nature of a charitable or voluntary or religious organization or any such organization that carries out social or economic or developmental programs to reach to those people where even the government cannot reach. Employees of . The highest income tax rate payable by an individual resident in Ghana is 25%. In Chapel Hill School Limited v the Attorney-General and the Commissioner, Internal Revenue Service, [2009, Unreported] Dr. Date-Bah JSC (as he then was), said Our comment on this argument by the Second Respondent (Commissioner, Internal Revenue Service) would be that the mere fact that what the Appellant does constitutes a business does not inevitably lead to the conclusion that the activity cannot be exempt from tax. Are religious organisations required to pay taxes and/or comply with the tax laws of Ghana? Individual Donors for Education - Funding Grants for NGOs - Children's Homes - Orphanage Funding and Support - Click Here! We have a series of layers of audits, the donors come for verification, the donors look for an external auditor, and you also have to look for an external auditor, he mentioned. Exempt amounts include: Salary, allowances, facilities, pension and gratuity of the President; Income directly connected to the Government or local authorities' activities; 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. Unlike before, all companies limited by guarantee were excluded from Corporate Taxes and Value Added Tax (VAT). 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. Some tax laws are complex, not easily understood. (All goods and services exempt from VAT are also exempt from the NHIL and GETFund). With passing time, there can be said to be a substantial increase in the activities of the Indian NGOs. This is because such donations do not only benefit these organisations, but are also tax deductible for the donors in computing their chargeable income. This organization is a registered Non Governmental organization. The NGO also functions in some areas of West Africa as follows: Benin, Burkina Faso, Liberia, Nigeria, and Sierra Leone. Misconception #1 - Understanding of the term 'Charitable activities'. 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 bilateral and multilateral aid is one of the biggest sources of funding we have seen over the past fifty and more years. Unicredit Bank, Near Dome Market, Accra, Ghana. From time to time, the GRA may initiate a company audit. 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. Do note that whilst it's branded as Ghana.GOV, the actual url is ghana.gov.gh. But the big deal here is that you still have to pay them. Kindly update. NGO and Paying Tax. Hips Charity Organisation Education is situated in Accra, Ghana. Accordingly whoever is found guilty under the Act, shall be punishable with an imprisonment for a term that shall not be less than three years but may extend to seven years and fine which may extend upto five lakh rupees. Justice Oliver Wendal Holmes (US Supreme Court 1841-1935), once said that taxes are the price we pay for a civilized society. A026/10/22. This classification should, however, be distinguished from zero-rated supplies. It specifically exempted religious bodies Catholic, Anglican, and Presbyterian Churches from paying duties on imported items. Hence, you should know the various taxes to pay and the rates. Taxation of a resident person in Ghana is based upon the principle of worldwide taxation. Redempta Maira is a Senior Manager, Tax Services at PwC. Should you have any comments, you may send it by email, kwasi.nyantakyi.owiredu@gmail.com. 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. As a result, the exemption from tax of the income of a religious organisation is not applicable to the individuals. Green Earth Organisation is situated in Accra, Ghana. In particular, whilst for an individual there is no filing obligation if there is no taxable income, for an entity (i.e. b. Jesus responded Render unto Caesar the things that are Caesar's, and unto God the things that are God's. This legal status makes it easier for NGOs to operate, as they are not required to pay tax on the funding they receive from government bodies, donors, and other sources. The organization is working in Associations business activities. 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. . Taxable in the same manner as voluntary contributions (without specific direction) as above. Where is the Russian oil stashed in Ghana? Using an Umbrella Company for Income Tax : publishing, and training); vi. 10, Plot 48, Osu Badu Road/Broadway, Accra, Ghana. Such income includes employment income, business income and property income. The annual turnover figure must correspond with the companys sales book and bank statement sales deposits. 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. Finally, the urgency of the exercise drives home the need to increase domestic revenue mobilization in order to be less dependent on external resources for development. But the big deal here is that you still have to pay them. The Ghana Revenue Authority (GRA) is the government body mandated to collect and assess taxes. BECAUSE, THE LABOURERS I WILL ENGAGE THIS WEEK ARE NOT THE SAME LABOURERS I WILL ENGAGE NEXT WEEK. A recommended letter from the district, municipal or metropolitan assembly responsible for the area where your NGO is to be located. Businesses exempted from corporate tax are still required to register their business with the GRA to pay income tax. Currently, to qualify for any exemption, the company is required to write an official letter to the Commissioner General of Ghana Revenue Authority for the authority to assess, determine and if deemed necessary, grant the exempts based on the nature of business activities and where there will be any estimated profits or not from their operations. From the historical analysis above, there are key underlying themes running through all the various tax dispensations. The income of an individual may arise from sources including, i. 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. operation of commercial transport. Tax Policy Issues. Calculating taxes can be tedious, even more so if you are not sure about the rates and percentages. 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. There are two conditions that must be satisfied for a person to register for VAT. Petrol, diesel, liquefied petroleum gas, kerosene and residual fuel oil. For tax exemption purposes, a religious organisation must not engage in business the purpose of which is to make profit. I summarize below the information from the survey carried out from August 1998 to March 1999. 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. An expense is deductible if it is wholly, exclusively and necessarily incurred by the person in the production of the business or investment income for the year. 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. 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. Admittedly these numbers only point to the extent of enforcement of payroll taxes. 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. Employer & # x27 ; s branded as Ghana.GOV, the income that is being exempted should not private. Comply with the companys sales book and Bank statement sales deposits Education is situated in Accra, Ghana an (! 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