An NGO is an exempt organization under the Act. The girls are placed in top corporations where they get work experience in their related areas during the summer breaks. These originate either from the foreign offices of the developed countries or from the multilateral organizations set up by different countries such as the United Nations, the World Bank, the Asian Development Bank. 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. This can be done where the operating vehicle is through the establishment of Trusts, for example. Please feel free to contact us for your Customs classifications and validation, Copyright Notice U/S. Ms Chisanga was commenting on government's decision to issue statutory instrument 103 suspending tax exemption facility for NGOs. same must be subjected to withholding taxes. Advertisement. STEP 4- Company limited by guarantee regulations form. conferring a private benefit, other than in pursuit of a function of the entity as a religious institution. 1. Where is the Russian oil stashed in Ghana? Kasoa, Down-Town, KD 195/9, Accra, Ghana View map. Justice Oliver Wendal Holmes (US Supreme Court 1841-1935), once said that taxes are the price we pay for a civilized society. Income Tax Exemptions are the amounts that are reduced or removed from Income amounts because they are exempt from taxation. The normal response will be Of course!. The employment income of the pastor is US$8,333.33 per month. c.Provision of services such as training, or consultancy. Petrol, diesel, liquefied petroleum gas, kerosene and residual fuel oil. These exemptions are to be outlined during filing. The entity is established to operate as a religious institution which is of a public nature, b. After 14 years following the passage of the Income Tax Ordinance, then came the Income Tax Decree, 1975, S.M.C.D 5. PricewaterhouseCoopers 2008 Tax Facts and Figures 1 Income liable to tax Income tax is levied in each year of assessment on the total income of both resident and non-resident persons in Ghana. NGOs can accept donations from private individuals, for-profit companies, charitable foundations, and governments, whether local, state, federal, or even foreign. It maintained the tax exemption status for religious organisations under Section . 35AC of the Act if an NGO gets registered the central government approves of the scientific research programs/projects to be carried out by such organization. Such pernicious inequities in the tax burden have in the past contributed to smuggling in no small measure of exports. So far as income tax is concerned, in many cases the law will at a practical level normally result in an NGO not having an income tax liability. Which started in 2005 as an organization aimed at promoting Baseball and Softball throughout Ghana. It is, therefore, important for the Ghana Revenue Authority to develop training programme to educate all charitable organisations including religious organisations to ensure full compliance with the tax laws. Employees in Ghana pay income tax using the Pay As You Earn system. (All goods and services exempt from VAT are also exempt from the NHIL and GETFund). In practice, therefore there is the need for NGOs to ensure the office of the Minister for Finance is also involved in the process of negotiating contracts with the other relevant Ministry, so that the exemptions concluded can be gazetted. Box WJ 305, Ngleshie Amanfro Ghana Post GPS Code: GS0163-6020 Tel: +233 (0)30 290 8466/7 Email: info@gsma.gov.gh d.Taxation of the Business and Investment Income of Religious. It is for the organisation, simpliciter. Ultimately any NGO that buries their head in the sand, thinking that tax issues are not a primary concern for them are running a risk. In 2017, the annual income generated by a church from. The Registrar of Companies appears not to be enforcing the law. it was established and registered in December 2001 with the Registrar Generals Department and the Department of Social Welfare. 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%. The Federal Inland Revenue Service (FIRS) recently issued Information Circular No. However, the Ghana Living Standards Survey carried out in 1998/99 gives us some indication about which groups of individuals most likely are paying taxes and who is not. National Disaster Management Organisation (NADMO) is situated in Accra, Ghana. 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. 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. Individuals are taxed based upon their income from employment, business and investment. This write-up, therefore is simply to. They establish rules governing matters including, d.Trustees and board roles people and skills. b. Can an NGO be converted into a Company Limited by Shares? Although ministries, departments and agencies are required to submit a list of all contracts awarded to consultants to the Internal Revenue Service, it is believed that compliance is low. Construction and renovation of church premises. 2. 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. So, in a word do remember to file the returns even if no tax is payable! This was in recognition of the contribution these organisations made in society as they prioritised the helping of the poor and needy whilst lifting the spiritual welfare of the people. Annual income tax rates (Effective January 2022) , Monthly income tax rates (Effective January 2022) . You have successfully registered for the webinar. Therefore, the applicable withholding tax rate is 3%. It enforces the provisions of the tax acts and serves as the first arbiter between parties in the event of a dispute. obought a land cruiser, a Mercedes Benz, and a House for a combined sum of US$500,000, obought shares in a foreign company at a cost of US$100,000. i.tithes and offering amounted to US$600,000. The TCCs serve as tax credits towards annual tax payable. TAX LIABILITY OF NGOs: All voluntary or charitable organisation as defined U/S.2 (15) of the Act has the liability to pay service tax on the income actually received by them, except for that donation which has been specified to be 'corpus' by the donor in writing. Medical services, essential drugs as listed under Chapter 30 of the HS Code produced or supplied in Ghana, specified active ingredients for essential drugs, and selected imported special drugs determined by the Minister for Health and approved by Parliament. In addition to all these, what has been made taxable are the kind of anonymous donations made by any organization or institutions or individual to a charitable organization at a rate of 30%. Calculating taxes can be tedious, even more so if you are not sure about the rates and percentages. Application letter on the organizations official letterhead, Memorandum of understanding between the NGO and the Government. Some paid up, some negotiated to settle years of overdue taxes to avoid the dishonour of business closure. To the extent income is applied to such charitable or religious purposes in India. Copyright 2016, All Rights Reserved. In Ghana, tax is deducted from an employees personal income at source through a pay-as-you-earn scheme. 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. The commitment to paying taxes is low. Some tax laws are complex, not easily understood. . Misconception #1 - Understanding of the term 'Charitable activities'. The implication of the above definition was that, for any religious organisation to qualify for exemption, it should not only be described on paper as such, it must also act pari passu. Similar sentiments has been expressed by his Excellency, President Nana Addo Dankwa Akufo-Addo. Therefore, the applicable withholding tax rate is 5%. In the third year in the university, the girls are encouraged to partake in the study abroad schemes in other to help them appreciate other peoples culture and gain exposure. Supply of goods such as books, anointing oil, etc. However, should the religious organisations operating vehicle be by way of for example Trust with individuals as ultimate beneficiaries, the business profits shall be taxable. The first step in paying your business' taxes online from the comfort of your home or office is to visit the Ghana.GOV website. Donation to religious organisations creates a 360 degree benefit for individuals. Income subject to Tax under the Tax Law, a. Business Income of a Religious Organisation. In terms of donor funding, in the current world that we are in, every penny of the donor must be accounted for. Financial Statement for the year of filling. Those earning above $700 should be having 3,5 percent of $700, which is $24,50, deducted from their salary. Considering the enormous powers of the CG, if he fails to enforce the law, who should we blame? These organizations do not exist for profit motive, hence called as . 4. I hope it wouldnt take a court to compel the CG to do what he is supposed to do. 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. A church intends having its 20th Anniversary and the Planning Committee has outlined the following programme of expenditure and the costs are payable in the month of August 2018: a. 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. 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. One of the new activities included was skate soccer and also beach soccer. According to the most recent estimates from the International Centre for Tax and Development, total tax revenues account for more than 80% of total government revenue in about half of the countries in the world - and more than 50% in almost every country. The School is not into the business of rental of commercial premises. 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 . WHAT HAPPENS TO THE PROFIT EARNED BY THE NGO? When expanded it provides a list of search options that will switch the search inputs to match the current selection. The Income Tax Act, Chapter 340, Section 2(f) provides guidance on the types of economic activities that exempt organizations may engage in without becoming liable for . The more senior the job within the NGO, the higher the wages will be. Individual Donors for Education 2023/2024; 3000+ Grants, Donors and Foundations Providing Support and Individual Support for Education. Fifth, while there is a constant push to raise taxes from the informal sector, policy-makers must weigh the cost of the enforcement and the equity-efficiency concerns in order to determine how and where best to allocate the tax collection effort. The highest income tax rate payable by an individual resident in Ghana is 25%. My contribution is directed towards the Commissioner-General (CG) and his officials, the Government of Ghana, Tax Professionals and Students, and the Academia in our attempt to educate the religious fraternity, and the general public, in particular, the ordinary man in madina trotro. 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. Privacy Policy In Matthew 22:21, Jesus was asked by the Pharisees whether it is lawful to pay taxes to the emperor, or not. African Youths for Peace And Organization is situated in Mataheko, Ghana. File Annual Returns at Fifty Ghanaian Cedi (GHS 50) together with Audited Account. The purchase of T-shirts and clothes are considered as goods. A resident of India having a taxable income and a non-resident having an Indian passport can claim for benefits if they have made a donation to an NGO which is registered with the Income Tax Department and holds tax exemption status u/s. About 55 of every 100 people who worked in industries either earned below taxable income or their employers failed to recognize their earnings as taxable. On the assumption that this represents payment to the photographer for the whole year, the payment is exempt from tax. Charitable or Religious trusts are constituted to promote the welfare of public and hence, Income tax law provides exemptions to any income derived from property held under such trusts if it is not misused or diverted to non-charitable objects. What is the withholding tax obligation of the Church? Are we condoning contravention of Act 179? Do NGOs pay tax in Ghana? Income of religious leaders and/or employees of religious organisations. The rate for the withholding of the taxes depends upon the nature of transaction and residency of the supplier. This resource describes the legal framework governing nonprofit organizations (also known as non-governmental organizations or NGOs) in Uganda, . Ordinary meaning can, therefore, be given to the stream of income attributable to religious organisations that are exempt from tax. It specifically exempted religious bodies Catholic, Anglican, and Presbyterian Churches from paying duties on imported items. Find Individual Donors List; List of 3500+ Donors and Foundations Supporting Individuals Worldwide! i. She could neither sue in tort nor in contract. From the foregoing, the objects of a religious organisation may include, but not limited to provision of services to, or conferring of benefits on an identifiable community or body or a section thereof with equal access to all intended beneficiaries without any particular individual(s) being the ultimate beneficiary(ies). Its primary objective is to fight poverty in Ghana in rural communities especially. The religious organisation must also apply to the CG for the grant of the status of being a religious organisation as a way of serving as check and balances to curtail abuse of the tax exemption process. (It must be proved and signed by directors of the company at the Annual General Meeting of the company). The exercise turned out surprising results. 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. Condition of Use 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. 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. This exemption does not apply to certain special industries; Interest or dividend on an investment paid or credited to a holder or member of an approved unit trust scheme or mutual fund; Interest and gains realised by a non-resident person on bonds issued by the government of Ghana; Gains from the realisation of GSE- listed securities; Income of an approved unit trust or mutual fund; and. Policymakers regularly review and propose . Employees of . There are two conditions that must be satisfied for a person to register for VAT. The supply of educational services at any level by an educational establishment approved by the Minister for Education. If an NGO, a Section 8 organisation, or a charitable trust wishes for their donations to be excluded from income tax liability, they can apply for registration under Section 12 A. The organization is a Non-Profit Organization whose aim is to help girls fulfill their purpose by educating them. A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. RUPFA was registered on 27th July 2015 with the number CG172072015 of Registrar General of Ghana under Companies Codes, 1963(Act 179). And political interpretation of the exercise only further calls attention to those who are most affected and their aversion to comply with tax laws. But the big deal here is that you still have to pay them. The income accruing to or derived by a charitable organisation is exempt from tax . This is because shares confers beneficial interest in a company to only identifiable members. Failure to withhold taxes is an infringement of the law which exposes the organisation to penalties and interest surcharges. "However, before you are exempted from paying certain taxes, the individual must go to GRA with a. 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. This was in other to include more sports and youth development activities. You have entered an incorrect email address! The withheld tax must be paid to the Ghana Revenue Authority within 15 days following the month to which the payment relates. Tax Policy Issues. Mining firms thus appear to be more compliant with payroll deduction than other industries that operated in the economy in the nineties. Income Tax The principal In addition, certain tax obligations or costs will normally not be exempted - for example, payroll taxes on employees, withholding taxes on suppliers, stamp duty on various legal instruments and indirect taxes on supplies of certain services (for example, telecommunications, electricity). 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. Such tax cheating can be overcome (not eliminated) through sting operations and random audits. The Ministry of Finance and Economic Planning together with the revenue collection agencies recently launched a special revenue mobilization exercise to improve and expedite action on overdue taxes. Save my name, email, and website in this browser for the next time I comment. VAT is applicable on all taxable supply of goods and services provided in, and imported into Ghana unless exempt. BENEFITS AVAILABLE TO THE NGO & CONTRIBUTORS: An NGO by getting itself registered u/s. There are countless times when weve (donors) gone out there and weve seen flaws and weve actually cancelled grants. Pay processing fee of GHS270.00 at the in-house bank or via Online. The most typical earning is 85,745 GHS. We should, therefore, consider having similar Charity Commission established by an Act of Parliament in Ghana and tweak it to meet our needs. Top Management In Tanzania, NGOs can apply to be recognised as charitable organisations, subject to written applications filed with the Commissioner of TRA. The views expressed do not necessarily represent those of PwC. Terminal clerk cross-checks and confirms that the correct fees have been paid. Taxation of a resident person in Ghana is based upon the principle of worldwide taxation. In many countries, NGOs are exempt from paying state and federal taxes. The NGOs which cannot generate their own income are completely depends on funders to pay their employer cost. The surplus can either be carried forward to the succeeding years without any kind of limitation or accumulated for a specific purpose. No. All companies are required to file their monthly and annual tax returns. 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. The net amount due to the School is US$1,700. 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. 501 (c) (3) charitable nonprofit organizations typically are exempt from paying income and property taxes and donations to their work are deductible on federal and most state tax returns. Company is working in Associations business activities. E Plaza 2 Building, Accra, Ghana, P.O.BOX AN 16859, Accra North Ghana, Accra. An NGO doesn't have to pay tax just by . There are two interpretations to this finding. Twelve companies owed nearly 12.3 billion cedis, nearly enough to finance the administrative expenses of the Ministry of Justice in fiscal year 2006. Africa Health Research Organization is situated in PO Box AN6731, Ghana. Value of Taxable Supplies = Ghc 12,000, NHIL = Ghc 12,000 * 2.5% = Ghc 300, COVID-19 LEVY = Ghc 12,000 * 1% = Ghc 120, Subtotal Ghc 12,720.00, VAT = Ghc 12,720 * 15% = Ghc 1,908.00, Total Amount to be paid to GRA = NHIL + GETFL + VAT, which type of tax rate is appropriate for manufacturing, retailing and wholeselling companies in ghana, keep updating us on current tax issues pending in the country. 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. Disclaimer of Warranty, About Us Nice Article. The use of a pastor is by no means an attempt to limit the taxation to only churches and/or pastors. Status as Religious Organisation for income tax purposes. Some NGOs are local while others are International NGOs. It is, therefore, important for us as a country to know the position of the law and chart a way forward in creating an all-inclusive society that promotes fairness in honouring our tax obligations. 3. Lastly, the income that is being exempted should not confer private benefit. But their major areas of operations include research, policy analysis, community development, environmental protection, advocacy, training, and development. Average salary in Ghana is 306,223 GHS per year. BUT WHY SHOULD I PAY PAYE FOR WAGES? But that is an entirely different matter. Renovation of the church painting, repairs and related construction activities etc. However, NGOs like any other organization are subject to the tax regime of Uganda. I summarize below the information from the survey carried out from August 1998 to March 1999. NGO staff receive a salary for the work they do. Kindly update. This button displays the currently selected search type. (NGO Act Section 46 (1)). Generally, NGO salaries are lower than in the private sector. In other words, so long as a charitable organisation uses at least 75% of its income in their charity activities then there will be no taxable income. Payroll deduction of those who worked in the financial service industry was about 77%, and only 45% in the manufacturing and transport sectors. The least tax compliant were those who worked in occupations that involved service delivery, sales, transport and construction tradesmen. But, he's put the right spin on his tax situation by . 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. does not confer a private benefit on any person other than in pursuit of a function or activity that is in line with the objects of the entity. Non-Governmental Organizations (NGOs) play a vital role in the process of social and economic development of the economy. To register your company with the GRA, the following documents are required; Completed corporate tax registration forms, Pictorial delineation of the project/office location. This combination undermines the growth of domestic revenues. 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. It is the employer's responsibility to file monthly tax returns on behalf of its employees. The person/ entity making donations can avail this benefit only if the NGO receives a certificate under 12A and 80G. Furthermore, it will go a long way to help promote a charity sector geared towards their traditional role of helping the poor and needy whilst building the spiritual life of the people. Women receive a salary of 260,912 GHS. 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. And, any corresponding expenditure must relate to the purpose for which it was set up and approved by the CG. 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. b. This classification should, however, be distinguished from zero-rated supplies. Posted 3 April 2017 Lerato says: 3 April 2017 at 11:41 In which circumstances will a non profit organisation pay tax? Form 3A must be witnessed by Commissioner for Oaths/Notary Public/Self-Declared. This article details everything you need to know about tax registration, tax rates, tax incentives, withholding taxes, income taxes, monthly tax filings, and audits in Ghana. To be on the safe side, do your due diligence and research extensively. We should bear in mind that, for tax purposes, all non-taxable income of a religious organisation must not enure to the benefit of an individual. The Golden Opportunity Organization Ltd. is situated in Accra, Ghana. As provided by the Act only 85% of the total income received by an NGO is to be utilized and the remaining 15% is accumulated for later use and corpus fund forms a part of such remaining income. Constitution and prohibition of the organisational activities. Using an Umbrella Company for Income Tax : Disclaimer of Warranty, About Us