Tax losses in ghana 2009 by richard pdf

The ghana income tax act of 2015 requires the revenue authority to direct a company to pay the appropriate tax whenever there is capitalisation of profits. The ghana revenue authority, act, 2009 act 791, established the ghana revenue authority, the gra as a body corporate with capacity to sue and be sued. The economic miasma and the problems of tax administration made tax reforms a critical component of ghana s structural adjustment program, which was implemented in 1983 to revamp the economy. These factors call into sharp focus the need for tax reforms. In order to show to which extent tax incentives in ghana affect the effective tax burden of corporations and might result in a loss of revenue, we calculate the emtr and the eatr for the tax regimes between 2008 and 2012 and. Indeed, ghana has undertaken series of tax reforms since the commencement of the fourth republic in 1992. All companies liable for tax in ghana, are required to pay provisional tax quarterly.

Corporate tax 7 rates of tax 7 year of assessment companies 7 basis period 7 deductions allowed 7 deductions not allowed 7 capital allowances 8 carryover of tax losses 8 mineral royalties 9 ringfencing of financial institutions, petroleum and mineral operations 9 dividends 9 national fiscal stabilisation levy 9. The baseline study on ghanas tax system brings out the history of the tax system in ghana, identifies the main bottlenecks and. Ghanas general vat rate is 15%, with other rates including 17. Poll taxes are administratively cheap because they. Tax research in ghana, like other developing countries, seems to focus greater attention on the twin issues of administrative reforms of taxation and reduction of corruption richard, 2003. Public lecture institute of chartered accountants of ghana. Transfer pricing and developing countries ghana 3 p a g e the tax authorities have further put in place measures to make the tax environment more customer friendly to taxpayers in order to increase tax revenues, encourage voluntary compliance and reduce the cost of compliance. We are a group of individuals from different industries and with expertise in ghana tax laws. Davis, lusine lusinyan, amine mati, paolo mauro, murray petrie, and ricardo velloso i n t e r n a t i o n a l m o n e t a r y f u n d fiscal risks sources, disclosure, and management.

In ghana, the ghana revenue authority act, 2009 act 791 mandates the establishment of the ghana. Tax revenue generation and the economic development of. For example, terkper 2007 explored ways of improving the tax accounting systems. Should the netherlands sign tax treaties with developing. Taxes consist of direct or indirect taxes and may be paid in money or as its labour. Aggressive tax planning indicators final report european. Adeyiga commissioned by ghana integrity initiative gii in collaboration with oxfam america with funding from german international development giz accra.

A failure to pay, along with evasion of or resistance to taxation, is punishable by law. Ghana has not been left out in these critical tax reforms. Ghana pkf assurance, audit, tax, advisory and business. Fiscal affairs department international monetary fund. New income tax law to allow carry forward of losses gra. A comparative analysis of taxation on revenue generation in. Sep 14, 2009 tax justice in ghana posted on september 14 2009 a new tax haven created by the west african state of ghana could attract tax dodgers and drug traders seeking to launder money unless safeguards are introduced, warns a report launched today. See richard musgrave, criteria for foreign tax credit, in taxation and opera. Platforms for calculating paye, vatnhil and withholding taxes have been made available for free usage. Tax justice in ghana posted on september 14 2009 a new tax haven created by the west african state of ghana could attract tax dodgers and drug traders seeking to launder money unless safeguards are introduced, warns a report launched today. Financial institutions required to recapitalise by the regulator may request from the revenue authority a tax waiver on the recapitalisation, on the premise that the recapitalisation is a.

While generalisations demand further research, initial evidence points to several factors that shape the nature of state. Assessing the performance of ghana revenue authority in. This levy was imposed on businesses in 2009 but has been abolished from january 2012. Evaluating taxpayers attitude and its influence on tax. Tax incentives in west africa 4 this part of the report conducts a brief analysis on another missed opportunity to increase the tax base in ecowas. Unrelieved losses means the amount of a loss that has not been deducted in calculating the income of a person resident individuals income tax 0. A poll tax, also called a per capita tax, or capitation tax, is a tax that levies a set amount per individual. All of these are expected to work together in order to achieve the economic goal of the nation. Effective 01 july 2007, the currency of ghana the cedi was redenominated to ghana cedi gh. Insurance premium with a source in ghana 5% individuals 20% tax is withheld at source and it is a final tax individuals income tax table a company, other than a resident.

Customs, excise and preventive servicemanagement law customs and excise duties and other taxes act. Taxes on foreigners real estate rental income in ghana. Pkf worldwide tax guide 20 iii preface preface the pkf worldwide tax guide 20 wwtg is an annual publication that provides an overview of the taxation and business regulation regimes of the worlds most significant trading countries. A personal income tax ranging from 5%, to 35% for foreign nationals and rich citizens is also levied. In 1943, the income tax ordinance was introduced in ghana. Why taxation reform is needed in ghana modern ghana. The corporate tax rate in ghana stands at 25 percent. Pwc corporate income taxes, mining royalties and other mining taxes 2012 update 3 as ring fencing. This study investigates the effect of ghanas tax policies on poverty. The tax system in nigeria is made up of the tax policy, the tax laws and the tax administration.

Impact of tax administration on government revenue in a. The analysis below demonstrates that tax incentives. Where the company provides the employee with accommodation, the employee is assessed to additional tax on the benefitinkind element as follows. The standard economic approach to taxation and development focuses on how economic change in. Information from the internal revenue service irs indicates that the first customs law was passed under colonial rule in 1855 and later replaced in 1876 by a customs law based on the united kingdom customs consolidated act, 1876. Tax losses brought forward from previous years limited to five years and applies. Simplify the income tax law provisions and make it user friendly address various forms of tax base erosions on employment income, gift tax and interest paid on residential mortgages 30 november 2015 global tax alert ghana enacts new income tax act ey global tax alert library access both online and pdf versions of all ey global tax alerts. However, in the case of a trust of an incapacitated individual, the individual tax rate shall apply. Income earned by companies is subject to corporate income tax at a flat rate of 25% as of 2012.

Tax administration in ghana therefore has seen a number of reforms since the 1960s, with the most recent being the integration of the revenue agencies to an authority to act as a one stop shop as per the ghana revenue authority act, 2009 act 791. Income tax in ghana can range from 0 to 25 percent, and you need to be sure you are placed in the correct tax brackets. According to bird 2004, kefela 2009 and franzsen 2012, developing nation like ghana is perceived as not. Controversially, a value added tax vat was introduced in 1995. Fiscal affairs department aliona cebotari, jeffrey m. Tax reforms and revenue mobilization in ghana request pdf. Transfer pricing, tax havens and global governance, by ganapati bhat, an officer of the indian revenue service in the directorate of transfer pricing. A comparative analysis of taxation on revenue generation.

Updated with the income tax amendment act 1007 jan. The results indicate a very low awareness rate of gift tax. Tax reforms and revenue mobilization downloaded by university of ghana at 07. The act was assented to by the president on 31 july 2018 and gazetted on 1 august 2018. The ghana government, in the 2012 budget statement, proposed an increase to the corporate income tax rate from 25% to 35% and an additional tax of 10% on mining companies. This page provides ghana corporate tax rate actual values, historical data, forecast, chart, statistics, economic calendar and news.

Oct 23, 2011 the capitalgains tax rate is about 5% and the tax rate on dividends is 10%. Transfer pricing and developing countries ghana appendix c. This study aims to contribute to the closing of this gap by calculating the effective marginal tax rate emtr and effective average tax rate eatr to examine the effective tax burden under the prevailing tax incentive regime. Gift tax in ghana is covered by chapter iii of internal revenue act 2000, act 592. This tax reform study on ghanas tax system is outcome of the baseline study on the the tax system which was commissioned by the ghana.

We assist individuals and businesses having taxrelated difficulties at no cost. The valueadded tax vat is administered by the ghana revenue authority in accra. As part of a broader study of taxation for effective governance and shared growth being carried out for the u. Aside the trust issues, there are several noneco nomic and economic factors affecting tax evasion in ghana. In compiling this publication, member firms of the pkf network have. Ghana also collects a national health insurance levy of.

Taxable profits are based on profits declared in audited accounts subject to adjustments made for capital allowances. Revenue contribution in 2009 and 2010 tax % contribution in 2009 % contribution in 2010 vat 39 39 paye 15 19 customs duty 26 16 corporate tax 4 10 exercise duty 7 7 other taxes 3 3 source. The structure and purpose of this paper reflect both its origins and my limitations. Projections have fallen short in three of the four main tax instruments. Unrelieved losses incurred by individuals in any other sectors can be carried forward for three years. The intent is to analyse the national tax systems, the distribution of the tax burden, the. Corporate income taxes, mining royalties and other mining. Tax incentives can induce massive losses of government revenues, and can create tax competition. For more information on the tax rates in 2011 visit. Tax amnesty act,2017 act 995 introduction of tax amnesty. Rules of losses carry forward ring fence the losses example losses from exempt income shall be applied to that income only losses from reduced rate will only be deducted at the same rate. Businesses will now be allowed to carry forward their losses for purposes of taxation. Tax deductions and tax allowances a resident individual may deduct various personal allowances and reliefs from gross income in arriving at hisher annual taxable income. Tax justice in ghana richard murphy on tax, accounting.

According to the presidential committee on national tax policy 2008, the central objective of the nigerian tax system is to contribute to the. This changed in the netherlands in 2009, when a parliamentary motion. Companies operating in ghana are liable to pay varied levels of taxes depending on the sector of operation, and the location of the project and whether the company is listed on the ghana stock exchange. Department for international development dfid, i was asked to prepare a background paper from a tax perspective. Tax administration in ghana has a relatively long history. The new policy follows the passage of the new income tax act 2015 act 896. This leads to substantial tax revenue losses for indonesian society as the netherlands is the. 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 tax reform study on ghana s tax system is outcome of the baseline study on the the tax system which was commissioned by the ghana. I would also like thank richard jones, pkf uk llp, kevin reilly, pkf.

Pkf worldwide tax guide 2012 1 ghana ghana currency. Tax justice in ghana richard murphy on tax, accounting and. Social security contributions and life insurance premiums also are deductible within certain limits. Introduction ghana is widely acknowledged for the successful implementation of its farreaching structural adjustment program sap since 1983. This is according to the ghana revenue authority gra. A tax is a compulsory financial charge or some other type of levy imposed upon a taxpayer an individual or legal entity by a governmental organization in order to fund various public expenditures.

Tax rates, tax burden, income level, tax audits, penalty, etc. The economic miasma and the problems of tax administration made tax reforms a critical component of ghanas structural adjustment program. The government has introduced a tax amnesty scheme to allow taxpayers with outstanding tax returns and or liabilities from prior years to voluntarily submit the returns and or pay the taxes to regularize their tax status for the past years. Personal income tax, valueadded tax vat and customs duties are down by an estimated r15. Tax act, the following changes to the general tax regime in ghana have been made or were proposed in the 2016 budget statement and economic policy. Income liable to tax 8 taxation of individuals 8 corporate tax 8 indirect taxation 23 scope24 standard invoice credit scheme 24 vat flat rate scheme 24 group registration 24 tax representative 24 exempt supplies 25 vat and nhil incurred 25 withholding of vat 25 returns 25 penalties 26 communication service tax 26 special petroleum tax 26. A solution to incorporating tax revenue from the expanding informal sector is to introduce a selfassessment tax scheme whereby employers in the informal sector, many of whom are selfemployed can make an accurate assessment of the amount of tax they are able to pay, based on their earnings. Tax expenditure estimates in ghana abstract like many countries, ghana provides tax incentives to encourage private investments and reduce the tax burden of certain sectors and the poor. The study, published by the german development institute in 2009, compares the prevalent arms length principle approach to the formula apportionment approach. As of 30 december 1998, ghana s sales tax of 15% was replaced by valueadded tax vat with a standard rate of 10%. The parliament of ghana has passed the income tax amendment act, 2018, act 973. Corporate tax 25% capital gains tax 15% dividend tax 25% annual income tax rates effective january 2020 find below. A partnership is liable to pay income tax only with respect to final withholding payments. History and assessment of taxes ghana 1 had its first customs law enacted in 1855.

How the indonesianetherlands tax treaty enables tax avoidance. Ghana fiscal guide 20172018 5 transaction taxes valueadded tax vat is levied on the supply of goods and services made in ghana, on every importation. Ghanas income tax regime is characterized by a wide range of tax exemptions and. One of the earliest taxes mentioned in the bible of a halfshekel per annum from each adult jew ex. Gra practice notes to income tax act, 2015 act 896, ghana. In april, 2009 ghana set up committee to draft transfer pricing policy for ghana in may 2009 transfer pricing policy report was presented to the ghana revenue authority gra in 2010, the gra and ministry of finance with the support of development partners such as the oecd launched a project to put into effect the transfer pricing policy.