publishing, and training); vi. Therefore, the amount due the service provider is US$300. Any university/college/institution in the list notified by the Income Tax department or association or institution or public sector company or a local authority or to an association or institution approved by the National Committee carrying out scientific researchOr rural developmental programs, Rural Development Fund or National Urban Poverty Eradication Fund set up and notified by the Central Government. For foreigners who do not reside in Ghana but . The highest income tax rate payable by an individual resident in Ghana is 25%. In 1961 (fourteen years later), the Income Tax Ordinance introduced the concept of exemption from payment of income taxes by ecclesiastical or charitable organisations, Christian Council of Churches, the Muslim Council, et al. poor girls are given the chance to attend University. This is good. And, any corresponding expenditure must relate to the purpose for which it was set up and approved by the CG. All businesses are required to register with the Ghana Revenue Authority (GRA). Can an NGO be converted into a Company Limited by Shares? Privacy Policy In this instance, though, this cynicism is wrong. 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. The district office (A.M.A) after inspection and evaluation write a report to the national or regional office by submitting 3 copies of an endorsement letter of the department of social welfare. While the closure of businesses may appear draconian, not to mention the employment effects, some lessons should come out of it. From the historical analysis above, there are key underlying themes running through all the various tax dispensations. Businesses exempted from corporate tax are still required to register their business with the GRA to pay income tax. They should be encouraged to complete annual tax returns and make quarterly payments towards tax revenues and for social security payments. 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. they have been specified in the law, or in any other case, the procedure to enforce such exemption has been followed). The question is: whether or not a religious organisation is required to register for the VAT? It is based in Accra Ghana. (All goods and services exempt from VAT are also exempt from the NHIL and GETFund). 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. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Congratulations! A Guide to Tax Work for NGOs - International Budget Partnership Unicredit Bank, Near Dome Market, Accra, Ghana. Consumer and industrial products and services. 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. The activities of the entity should not directly or indirectly be to the private benefit of the owner(s) or associates of the owner(s). 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. This is the background to the general expectation that NGOs should not be subject to taxation. Lifeline Charity Organisation is situated in CPK 176/1 Walantu, Ghana. For sure, this is not limited to withholding payroll taxes. Notwithstanding the above, there are avenues or vehicles through which religious organisations can engage in profit-making activities without contravening any law. Subsequent to the above, the current practice is that the Church will have to procure Tax Credit Certificate (TCC) from the Ghana Revenue Authority to serve as evidence of payment of provisional taxes by the suppliers or service providers. The intention of the tax law is to tax the business income of a charitable organisation. A deduction shall be disallowed for an expense that is of a capital nature. 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. The GST law specifically defines the term . Anonymous donation received by a trust established wholly for religious and charitable purpose on. In many countries, NGOs are exempt from paying state and federal taxes. But progress has been slow since, especially when it comes to personal income and business profit taxes. iv. The NGOs which cannot generate their own income are completely depends on funders to pay their employer cost. The TCCs serve as tax credits towards annual tax payable. The supply of educational services at any level by an educational establishment approved by the Minister for Education. Do NGOs pay taxes in Uganda? Further the profits earned by any charitable trust from a construction project cannot be subjected to exemption u/s.11 but be entitled to deduction u/s.80IB(10). Sympathy International is owned and managed by a Ghanaian-owned Non- Governmental Organization (N.G.O). A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. conferring a private benefit, other than in pursuit of a function of the entity as a religious institution. The fact that the activities of Oxford University Press South Africa appeared commercial did not deprive Oxford University of its exemption from tax in respect of the proceeds from the business from South Africa What was important was that the income derived by Oxford University from its business in South Africa was fed into its educational purposes and was not for the private gain of individuals.. 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. Therefore, where the income is to the benefit of a specific individual, that income is subject to tax unless generally exempt. Third, because the tax burden is borne by the few, it is to be expected that the actual rates may be high in order to raise any needed revenue and a higher rate itself discourages compliance. He added that NGOs also pay taxes and are checked by the Ghana Revenue Authority (GRA). 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 . You have entered an incorrect email address! You must send a letter to the Comptroller of Customs that indicates the type of activity that your organisation is engaged in, that the efforts of the organisation are non-profit, and how the duty relief would benefit the wider public. Copyright 2016, All Rights Reserved. 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. One of the most consistently challenging aspects of contracting in Namibia is complying with the country's tax system. A deduction to the extent of 50% of the contribution can be made if so has been made to either of the following: b) The Prime Ministers Drought Relief Fund. Regional Coordinating Council, Ministries, Accra, Ghana. 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. 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. All businesses registering with the GRA, must do so at the nearest GRA district office closest to the project location. The entity is established to operate as a religious institution which is of a public nature, b. The rate for the withholding of the taxes depends upon the nature of transaction and residency of the supplier. The more senior the job within the NGO, the higher the wages will be. However, even if these agreements make a commitment to provide beneficial tax treatment, including exemptions, such commitments can only be enforced if they have effect under the relevant tax law (i.e. Lastly, the income thereof should not be for private benefit of individuals. Annual income tax rates (Effective January 2022) , Monthly income tax rates (Effective January 2022) . This is because shares confers beneficial interest in a company to only identifiable members. 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]. The NGO also functions in some areas of West Africa as follows: Benin, Burkina Faso, Liberia, Nigeria, and Sierra Leone. In Ghana, income tax is levied in each year on the income of both resident and non-resident persons . 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. On the assumption that this represents payment to the photographer for the whole year, the payment is exempt from tax. BUT WHY SHOULD I PAY PAYE FOR WAGES? First, personal income tax compliance is unevenly enforced across different sectors of the economy and by occupations. These exemptions are to be outlined during filing. Some NGOs in Ghana generally work through volunteers and they are funded through free-will donations from people. Twelve companies owed nearly 12.3 billion cedis, nearly enough to finance the administrative expenses of the Ministry of Justice in fiscal year 2006. d.Taxation of the Business and Investment Income of Religious. 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. Ghana Life Savers Organization is situated in Tema, Ghana. Companies limited by guarantee including NGOs are exempted from paying corporate taxes. 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 Wikimedia Foundation is ranked as the best NGO worldwide. 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. Condition of Use 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. 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. 2 Only certain types of nonprofit organisations are exempt from income tax. Privacy Policy 15 best maternity jeans that are actually comfortable, GRIDCo participates in International Day for Women and Girls in Science programme, Nigerian elections 2023: False claims and viral videos debunked, I smashed Major Mahama with cement block Killer, Come clear on 600k barrels Russian crude oil aboard MT Theseus IES to government, NIA to print more Ghana cards as government clears $100m debt, Tinubu is the best person for the job Buhari hails president-elect, Zamalek president jailed for one month for insulting Al Ahly rival, Accra 2023: Postponed Africa Games confirmed for March 8-23, 2024. A relief is an allowance given to a resident individual to reduce his or her tax burden. We should, therefore, consider having similar Charity Commission established by an Act of Parliament in Ghana and tweak it to meet our needs. Speaking in the same interview, the CEO of KankoAssociates, Mary Tobbin Osei supported Mr Nkaws position, as a donor, adding that NGOs are unbending when it comes to accountability. 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. Tax law is to the purpose for which it was set up approved! 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