Income tax in Ghana
May 22, 2017
Residents are taxed on worldwide income. Individuals are considered residents of Ghana if they reside in the country for an aggregate of 183 days within a year of assessment. Married couples are assessed separately.
Income is classified in the following categories: (1) business income, (2) employment income, and (3) investment income.
Income of residents is taxed at progressive rates. Taxable income is computed by deducting allowable deductions from the gross income.
|TAXABLE INCOME, GHC (US$)||TAX RATE|
|Up to 2,592 (US$648)||0%|
|2,592 – 3,888 (US$972)||5% on band over US$648|
|3,888 – 5,700 (US$1,425)||10% on band over US$972|
|5,700– 38,880 (US$9,720)||17.5% on band over US$1,425|
|Over 38,880(US$9,720)||25% on all income over US$9,720|
|Source: Global Property Guide|
Residents are entitled to several tax allowances.
Rental income earned by residents is subject to a final withholding tax levied on the gross rent. Rental income from leasing residential properties is subject to 8% final withholding tax, and rental income from leasing nonresidential properties is subject to 15% final withholding tax.
CAPITAL GAINS TAX
Capital gains are taxed at 15% of the net gains realized from selling real properties. Acquisition cost, improvement costs, and legal fees and other expenses necessarily incurred in the process of selling the property, are deductible.
Net gains not exceeding GHC50 (US$13) are exempt. Gains are also exempt if the entire amount is reinvested in another property within a year, and if the transfer of ownership was to the taxpayer’s spouse, child, parent, brother, sister, aunt, uncle, nephew or niece.
Property tax is annually by local authorities on the estimated value of the property, depending on the classification of the area where it is located. The rates range from 0.5% to 3%.
Income earned by companies is subject to corporate income tax at a flat rate of 25% as of 2012. Income-generating expenses are deductible when calculating taxable income.
CAPITAL GAINS TAX
Capital gains earned by companies are subject to capital gains tax at a flat rate of 15%. Acquisition costs and related expenses are deductible when calculating taxable capital gains.