We should, therefore, consider having similar Charity Commission established by an Act of Parliament in Ghana and tweak it to meet our needs. Your answer is as good as mine. He added that NGOs also pay taxes and are checked by the Ghana Revenue Authority (GRA). 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. Very helpful. - 2023 PwC. See you there. Income Tax Exemptions are the amounts that are reduced or removed from Income amounts because they are exempt from taxation. The programme should be segmented and tailored to meet the needs of each identifiable group for its effectiveness. These are: a. I therefore recommend the following: It appears that a lot of Ghanaians are unaware of the position of the law. Some paid up, some negotiated to settle years of overdue taxes to avoid the dishonour of business closure. The supply of educational services at any level by an educational establishment approved by the Minister for Education. i. One of the grievous misconceptions in the sector is the common assumption that all the charitable activities carried out by an NGO are exempt from GST. Any NGO, fund or institution established in India for a charitable purpose and fulfils the conditions laid down u/s.80G. Unlike the Operation Tax Harvest in the early days of the tax reforms, the 2006 exercise followed the tax amnesty granted in 2005 with the hope to increase compliance in the payment of taxes. Such tax cheating can be overcome (not eliminated) through sting operations and random audits. The girls are placed in top corporations where they get work experience in their related areas during the summer breaks. A provisional tax assessment is raised on all businesses yearly, including new business registrations. Further, a deduction of 100% of the amount contributed from the taxable income of the assessee can be made under the Section and further no monetary ceiling is applicable on donations made U/S. All rights reserved. Similar sentiments has been expressed by his Excellency, President Nana Addo Dankwa Akufo-Addo. She could neither sue in tort nor in contract. Lastly, the income that is being exempted should not confer private benefit. In the United Kingdom, for example, they have a Charity Commission responsible for regulating the charity sector. The normal response will be Of course!. 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. 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. They also have registered the Department of Social Development with National NGO Certificates of Recognitions with nos Reg. Ordinary meaning can, therefore, be given to the stream of income attributable to religious organisations that are exempt from tax. iii. 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. These are: b. Includes transportation by bus and similar vehicles, train, boat and air. Who or that has been issued with a written ruling by the CG currently in force stating that it is an exempt organisation; and, c.None of whose income or assets confer, or may confer, a private benefit, other than in pursuit of the organisations functions. For foreigners who do not reside in Ghana but . Obviously, the employment income of the pastor of US$100,000 and gift of US$50,000 couldnt have been enough to enable him make the kind of expenditure he made during the year. That said, for tax purposes, the taxman may be unconcerned with how the income is generated. This is the background to the general expectation that NGOs should not be subject to taxation. Changes after Registration of Company Limited by Guarantee. The 1947 Ordinance outlined the first provision of exemption from tax by charitable organisations including religious organisations. 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. Taxed at 30%. This article is written by Amrita Basu, a student of New Law College, Bharati Vidyapeeth (Deemed) University, Pune. Address description of the subscriber. Salaries are different between men and women. 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. More likely, it is their employers that may be at fault. Initially it was exactly the scenario but with increase in unscrupulous practices these NGOs were made liable to pay tax and also allowed exemption. 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. However, NGOs make efforts to pay fair wages to their workers. In order to be eligible for SSBI status an organization has to meet all conditions as set by the Dutch tax authorities. It is so with the collection of consumption (the value added) tax. First, personal income tax compliance is unevenly enforced across different sectors of the economy and by occupations. 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. Hse. Therefore, the applicable withholding tax rate is 5%. Speaking on Joy Primes Prime Morning, Mr Nkaw said that in as much as their salary is competitive, they are still not at the top to be perceived as extremely rich. In this instance, though, this cynicism is wrong. They equally have a license Certificate to Operate their Headquarters from Accra Metropolitan Assembly of Jurisdiction with Reg. 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. Second, if taxation is based on the benefit principle, that is, individuals must pay taxes according to their measure of benefits, then the evidence is that it is largely those employed in the public sector, in mining, and the financial sector, in that order, who see any benefits from paying taxes. SSBI's are not required to pay gift or inheritance taxes, as long as they apply for exemptions thereof by filing their gift taxes. It is the employers responsibility to file monthly tax returns on behalf of its employees. National Disaster Management Organisation (NADMO) is situated in Accra, Ghana. From the aforesaid provisions in Act 896, the lawmaker has empowered the CG to grant and revoke the tax exemption for religious institutions to promote tax compliance in Ghana. Prior to June, the deduction should have been three percent of the basic wage of those. 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. All companies are required to file their monthly and annual tax returns. What concerns us now is the degree of compliance. To be on the safe side, do your due diligence and research extensively. But the big deal here is that you still have to pay them. Helping Street Children And Empower Local Womem. So, in a word do remember to file the returns even if no tax is payable! No. 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. For domestic transactions, examples include, works (5%); goods (3%); services (7.5%); etc. Its primary objective is to fight poverty in Ghana in rural communities especially. Company is working in Associations business activities. NGO and Paying Tax. Antoa) and the like on all fours. The Ministry of Finance and Economic Planning is responsible for overseeing the GRA. This can be done where the operating vehicle is through the establishment of Trusts, for example. I say so because, how many of our religious organisations file their annual returns with the Registrar of Companies? Save my name, email, and website in this browser for the next time I comment. These exemptions are to be outlined during filing. they have been specified in the law, or in any other case, the procedure to enforce such exemption has been followed). Be that as it may, the following are clear. Roger Federer. Donation exceeding higher of: i) 5% of total donations received by trust or ii) Rs 1,00,000. Not-for-profit organisations or Guarantee companies typically retain any surplus income for re-investment or use it to promote the non-profit objectives of the business rather than distribute profits to members. In respect to income tax, NGOs are charitable organizations and are exempt from payment of income tax. However, obtaining the charitable status does not amount to income tax exemptions. Hips Charity Organisation Education is situated in Accra, Ghana. Third, there is a fundamental issue of whether we are sharing the tax burden fairly? The exercise turned out surprising results. For tax exemption purposes, a religious organisation must not engage in business the purpose of which is to make profit. 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. In Matthew 22:21, Jesus was asked by the Pharisees whether it is lawful to pay taxes to the emperor, or not. 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. The writ of mandamus is of special value in such cases where there is a legal right but no specific legal remedy for enforcing such right.(Emphasis mine). NGOs In Ghana: Full List, Functions & Contacts (2022), Traditional marriage in Ghana: All you need to know, The Top 10 Natural Hair Products in Ghana, Orphanages In Ghana : Full List, Locations & Contacts (2022), How to Calculate Electricity Bill in Ghana (2022), Districts in Accra: The Full List + Details, Regions in Ghana & Their Capitals + Other Details, Dentists Salary in Ghana: See What They Earn (2022), Causes of Unemployment in Ghana & Solutions, African Centre for Peace Building, AFCOPB, Centre For Disease Control And Prevention In Africa(CDC AFRICA), Centre for Energy, Environment, and Sustainable Development (CEESD), Centre for Popular Education and Human Rights, Ghana, Coalition of NGOs in water and sanitation, Cradle Of Hope for Relief and Development, Drama Network Serving Society for a Better Tomorrow, Emmanuel Educational Foundation and Sports Academy for the Physically Challenged, Ghana National Deaf Childrens Society (GNDCS), Ghana Rural Action Support Programme (GRASP). Section 97(2) of Act 896 provides that the CG shall before approving an entity as a charitable organisation (including a religious organisation), ensure that, a. NGO's use part of the funds they raise to pay staff salaries. I hope it wouldnt take a court to compel the CG to do what he is supposed to do. All companies liable for tax in Ghana are required to pay provisional tax quarterly. Sanction of persons for non-compliance. The monies used by the pastor must have a source and must fall under one of the categories of income of an individual for which it should be subject to tax unless exempt. The bilateral and multilateral aid is one of the biggest sources of funding we have seen over the past fifty and more years. 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