Tax and duty can be waived on goods imported for a charitable purpose, or for use in a not-for-profit enterprise. Donation to religious organisations creates a 360 degree benefit for individuals. The Golden Opportunity Organization Ltd. is situated in Accra, Ghana. The writer is a Chartered Tax Practitioner, a Chartered Accountant, a Postgraduate of University of East London, a Graduate of University of Ghana (Business School) and a Student of Law. their aim was to provide an umbrella for the physically challenged, destitute, and less privileged youths in Ghana through activities like sports, education, healthcare and the art of helping one another. For tax exemption purposes, a religious organisation must not engage in business the purpose of which is to make profit. The intention of the tax law is to tax the business income of a charitable organisation. 21ST CENTURY INITIATIVES A local NGO which uses Drama as its mode of Education a non for profit for poverty reduction,health and education assistance for Ghanaian communities. 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. No. Similarly, Act 179, requires all Companies and Trusts to file their annual accounts (returns) with the Registrar of Companies. The law streamlined the definition of religious organisation by going beyond the limited scope provided under S.M.C.D 5 to include religious organisations other than churches. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Congratulations! Though educational institution is excluded from tax-exempt organisation under Act 896, religious institution remains. Other donations to the church amounted to US$800,000. Roger Federer. Calculating taxes can be tedious, even more so if you are not sure about the rates and percentages. First and foremost, the type of organisation should be religious in nature. My understanding of Jesus statement Render unto Caesar that which is Caesar's" is that it unambiguously commands people to respect state authority and to pay the taxes it demands of them. Lastly, the income that is being exempted should not confer private benefit. Unicredit Bank, Near Dome Market, Accra, Ghana. These . Therefore, where the income is to the benefit of a specific individual, that income is subject to tax unless generally exempt. 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. The intention of the law to tax the business income of charitable organisation gives rise to two key issues that needs addressing. The exercise turned out surprising results. b. The unreported (untaxed) income of the pastor can be derived as follows: 100,000+50,000+Undisclosed Income=500,000+100,000. 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. The learned judge also referred to the South African case of Chancellor, Master and Scholars of the University of Oxfordv. Commissioner for Inland Revenue, Republic of South Africa to support his position. 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. Learn more from these guidelines that will help you comply with all tax requirements in Ghana. The Revenue Administration Act, 2016, Act 915, gives the CG several powers to enable him enforce the law. In Ghana, tax is deducted from an employee's personal income at source through a 'pay-as-you-earn' scheme. Please feel free to contact us for your Customs classifications and validation, Copyright Notice Consumer and industrial products and services. VAT is applicable on all taxable supply of goods and services provided in, and imported into Ghana unless exempt. Ghana has so many NGOs operating in different dimensions and areas of the country. In respect to income tax, NGOs are charitable organizations and are exempt from payment of income tax. Should you have any comments, you may send it by email, kwasi.nyantakyi.owiredu@gmail.com. The normal response will be Of course!. Who procured it and for what? The increase in tax revenue since the early 1990s is often cited as one of the achievements of Ghanas economic reform; thanks to increase in the base of taxation, changes made to the tax structure, and reorganization of the tax institutions. Alcoholic beverages bottled, canned, contained in kegs for sale or packaged in any other form; Non-alcoholic carbonated beverages bottled, canned or packaged in any other form. Changes after Registration of Company Limited by Guarantee. Where such is the case, it is quite worrisome, and it requires immediate action. Business Income of a Religious Organisation. Disclaimer of Warranty, About Us Section 5(1) of Act 896 provides that the income of a person from a business for a year of assessment is the gains and profits of that person from the business for the year or part of the year. Income derived by religious organisation from engagement in business activities may include: i.sale of anointing oil, water, and similar goods, ii. 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. A registration under section 80G of the Income Tax Act, on the other hand, gives tax benefits (80G deduction) to an NGO's donor. Well, essentially there is a two step process in terms of (i) recognition as a charitable organisation and (ii) minimum annual expenditure on the organisations activities. poor girls are given the chance to attend University. Accordingly whoever is found guilty under the Act, shall be punishable with an imprisonment for a term that shall not be less than three years but may extend to seven years and fine which may extend upto five lakh rupees. ; US$5,000, b. On the flip side, the receipts of . Income Tax Exemptions are the amounts that are reduced or removed from Income amounts because they are exempt from taxation. From the foregoing, the total amount payable to the Ghana Revenue Authority is US$610. The Ministry of Corporate Affairs brought a uniform accounting and reporting framework for NGOs. 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. You have entered an incorrect email address! NGO's use part of the funds they raise to pay staff salaries. Using an Umbrella Company for Income Tax : (All goods and services exempt from VAT are also exempt from the NHIL and GETFund). A broader base makes lower rates possible. A provisional tax assessment is raised on all businesses yearly, including new business registrations. ii. g.Investigation of non-compliance with charity rules; h.Establishment of charity courts; and, i. 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. . Providential Aid Organization is situated in Kumasi, Ghana. SSBI's are not required to pay gift or inheritance taxes, as long as they apply for exemptions thereof by filing their gift taxes. Africa Health Research Organization is situated in PO Box AN6731, Ghana. The church is required to withhold tax of US$250 on payments to the supplier and pay same to the Ghana Revenue Authority. Most Not-for-profits / NGOs are not within the tax net of the central government. Prior to June, the deduction should have been three percent of the basic wage of those. And political interpretation of the exercise only further calls attention to those who are most affected and their aversion to comply with tax laws. The highest income tax rate payable by an individual resident in Ghana is 25%. African Centre for Peace Building, AFCOPB. As a result, the exemption from tax of the income of a religious organisation is not applicable to the individuals. Income Tax Exemptions are the amounts that are reduced or removed from Income amounts because they are exempt from taxation. A religious organisation that seeks the approval of the CG for tax exemption must have a written constitution with express provisions that prohibit it from: i.engaging in a political party activity, supporting a political party or using its platform to engage in party politics; ii. Anonymous donation received by a trust established wholly for religious and charitable purpose on. The annual turnover from the taxable supply must exceed GHC200,000 or part thereof in a quarterly or monthly period. But this is a general mis-conception that we tend to have because of the truth of it being a non-profit organisation. 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. Africa energy and utilities - Tax guide 2019. spiritual consultation fee. e.The photography services constitutes services. Such tax cheating can be overcome (not eliminated) through sting operations and random audits. The economic slowdown had a considerable impact on households. Income subject to Tax under the Tax Law, a. Ghana Life Savers Organization is situated in Tema, Ghana. In particular, the religious organisations and their associated stakeholders who are required to pay the applicable taxes and/or comply with the law are unaware of the responsibilities they have as operating persons in Ghana. 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. This exemption excludes professional services such as architectural or surveying (i.e. All businesses registering with the GRA, must do so at the nearest GRA district office closest to the project location. After 14 years following the passage of the Income Tax Ordinance, then came the Income Tax Decree, 1975, S.M.C.D 5. 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. The resources and income generated by the entity should not be assigned to, or distributed among the owner(s) or their associates. Overseas Shipper Tax. You can click on this link and join: https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA. The evidence is scanty. 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. ii. Tax Policy Issues. The first step in paying your business' taxes online from the comfort of your home or office is to visit the Ghana.GOV website. It is the employers responsibility to file monthly tax returns on behalf of its employees. Article 41(j) of the Constitution, 1992 requires every citizen of Ghana to declare his income honestly to the appropriate and lawful agencies and to satisfy all tax obligations. Individual Donors for Education - Funding Grants for NGOs - Children's Homes - Orphanage Funding and Support - Click Here! 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. 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. What makes tax evasion by persons and businesses possible is that it is difficult to track through payroll records, most often inadequately kept, and it is difficult to assess profits from proprietary businesses. 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. Laboratory equipment for educational purposes and library equipment. 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. 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. Top Management Youth World Travel Organization (YWTO) is situated in Ghana. The highest income tax rate payable by an individual resident in Ghana is 25%. i.tithes and offering amounted to US$600,000. Find Individual Donors List; List of 3500+ Donors and Foundations Supporting Individuals Worldwide! vii. Posted 3 April 2017 Lerato says: 3 April 2017 at 11:41 In which circumstances will a non profit organisation pay tax? Yes, But the salaries which NGOs pay are much lower than the corporate work. G31, G-Line, Patase Estate, Kumasi, Ghana. 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.. But their major areas of operations include research, policy analysis, community development, environmental protection, advocacy, training, and development. Given our history in the early 1980s, such cynicism is understandable. The World Bank grouped NGOs into two. 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. Penalty for late filing of tax returns are. Disclaimer of Warranty, About Us By necessary implication, the route for undertaking religious organisations in Ghana may be by a Company Limited by Guarantee under the Companies Act, 1963, Act 179, or by a Trust registered under Trustees (Incorporation) Act, 1962, Act 106 with no particular individual(s) being ultimate beneficiary(ies). BUT WHY SHOULD I PAY PAYE FOR WAGES? These organizations do not exist for profit motive, hence called as . v.From the facts, the aggregate cost incurred by the pastor in buying the vehicle, house and shares is US$600,000 [500k+100k]. 10% ceiling of the Gross Total Income applies, Government or any NGO approved local authority , institution or association used for the promotion of family planning, 10% ceiling of the Gross Total Income does not apply. A deduction to the extent of 100% of the contribution made if it has been made to the following: a) The National Defence Fund or the Prime Ministers National Relief Fund, b) The Prime Ministers Armenia Earthquake Relief Fund, c) The Africa (Public Contribution-India) Fund, d) The National Foundation for Communal Harmony, e) The Chief Ministers Earthquake Relief Fund, Maharashtra, f) The National Blood Transfusion Council, k) The Andhra Pradesh Chief Ministers Cyclone Relief Fund, 1996, m) The Chief Ministers Relief Fund or Lieutenant Governors Relief Fund, in respect of any State or Union Territory, as the case may be, subject to certain conditions, n) The University or educational institution of national eminence approved by the prescribed authority, o) The National Sports Fund to be set up by the Central Government, p) The National Cultural Fund set up by the Central Government, q) The Fund for Technology Development and Application set up by the Central Government, r) The national trust for welfare of persons with autism, mental retardation, cerebral palsy and multiple disabilities. For Individual Support and Sponsorship Use Contact Form. 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. An honorarium is considered employment income for income tax purposes and is therefore subject to deductions. PAYE contributions are withholdings from salaries of employees to satisfy their income tax responsibilities. f.Establishment of Charity Commission, The Corporate governance in the Charity industry in Ghana appears not to be robust enough to build trust that assures all and sundry that assets of these organisations are safeguarded. Conditions. Individual Donors for Education 2023/2024; 3000+ Grants, Donors and Foundations Providing Support and Individual Support for Education. Lastly, the income thereof should not be for private benefit of individuals. A Guide to Tax Work for NGOs - International Budget Partnership Condition of Use The girls are placed in top corporations where they get work experience in their related areas during the summer breaks. Admittedly these numbers only point to the extent of enforcement of payroll taxes. Form 3A must be witnessed by Commissioner for Oaths/Notary Public/Self-Declared. He is required by Article 23 of the Constitution 1992 to comply with the requirements imposed on him by Section 1(1) of Act 915 to administer and give effect to the tax laws of Ghana. Sections 97(3)&(4) of Act 896 makes the income of a religious organisation exempt from tax except income attributable to business. Prevailing view in some circles is highly critical of such exercises as politically motivated. The Registrar of Companies appears not to be enforcing the law. What is the cost of registering an NGO with Social Welfare? This will help the efforts in bringing sanity in terms of the objects of religious organisations, how they operate, among others. Most NGOs are not within the tax net of the central government (if at all they pay tax it may on some commodities) and in fact governments all over the world offer assistance in whichever way they can. With respect to resident persons, the income must be derived from, accrued in, brought into or received in Ghana. The CG has issued practice notes to serve as a guide in the implementation of the law in this regard. And in the advanced economies they are called Charities. The questions I seek to address in this contribution are as follows: a. 80G, 80GGA, 35AC(i& ii) and (i&iii) of the Act. NHIL and GETFund shall apply with the necessary modifications as may be required by law. 2 Only certain types of nonprofit organisations are exempt from income tax. Salary, allowances, facilities, pension and gratuity of the President; Income directly connected to the Government or local authorities activities; Income of a non-commercial public corporation; Gain from life insurance when the proceeds are paid by a resident insurer; The income of a non-resident person from a business that operates ships or aircraft, if the Commissioner-General is satisfied that an equivalent exemption is granted by that persons country of residence to persons resident in Ghana; A dividend paid to a resident company by another resident company when the company receiving the dividend controls at least 25% of the voting power in the company paying the dividend. Careers So if anybody is sitting somewhere thinking that you can pocket an NGOs money, spend it and marry more wives, try it, she cautioned. 4. It is actually the opposite. Thus, it may have come from, use of the churchs tithes and offering to his personal benefit, and. 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. In the case of Mould v. De Vine, Jiagge S. (as she then was) wrote, There was no alternative remedy available to the applicant. As nonprofit entities, they also. 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. 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). An NGO will receive Government Funding, only if registered under section 12A & 80G. Resident persons are taxed on their worldwide income while non-resident persons are taxed on income which has a source in Ghana. STEP 2- Apply for a Tax Payer Identification Number (TIN). Non-resident individuals pay taxes at the flat rate of 25%. Categorizados em: Sem categoria Este artigo foi escrito por Concept of NGO and Income Tax Provisions. . A relief is an allowance given to a resident individual to reduce his or her tax burden. The stamp is affixed on specified excisable goods in Ghana whether locally manufactured or imported. ", Every person in Ghana (other than an individual who is not into business) is required to withhold tax on payments to resident and non-resident persons for the supply of goods, works and services unless exempt. This combination undermines the growth of domestic revenues. There are two interpretations to this finding. And it is widely believed that those who must enforce compliance are not without blame. The NGOs which cannot generate their own income are completely depends on funders to pay their employer cost. For many in the latter category, the life style indicator of the proprietors suggests higher ability to pay. STEP 3 Complete Company limited by guarantee form 3B. LAASFUND was established in 2015. Secondly, the organisation should have a public character. 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. Companies limited by guarantee including NGOs are exempted from paying corporate taxes. it was established and registered in December 2001 with the Registrar Generals Department and the Department of Social Welfare. Renovation of the church painting, repairs and related construction activities etc. 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%. Individuals are taxed based upon their income from employment, business and investment. Are religious organisations required to pay taxes and/or comply with the tax laws of Ghana? Annual income tax rates (Effective January 2022) , Monthly income tax rates (Effective January 2022) . Notwithstanding the above, there are avenues or vehicles through which religious organisations can engage in profit-making activities without contravening any law. It is the employer's responsibility to file monthly tax returns on behalf of its employees. The renovation is considered as works. Financial Statement for the year of filling. Do NGOS pay tax in Ghana? More likely, it is their employers that may be at fault. The rate for the withholding of the taxes depends upon the nature of transaction and residency of the supplier. 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. ( not eliminated ) through sting operations and random audits it is the employers responsibility file! Can be overcome ( not eliminated ) through sting operations and random audits the i. That those who must enforce compliance are not within the tax net of the central government requires immediate action NGOs... 80Gga, 35AC ( i & iii ) of the central government uniform accounting and framework., Kumasi, Ghana 35AC ( i & iii ) of the exercise only further calls attention those! Construction activities etc quarterly or monthly period from payment of income tax rates ( Effective 2022! 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Authority is US $ 800,000 ( Effective January 2022 ), monthly income tax responsibilities withholdings salaries. Grants, Donors and Foundations Providing Support and individual Support for Education 2023/2024 ; 3000+ Grants, and... On specified excisable goods in Ghana benefit, and it is the cost of registering an NGO Social... Of enforcement of payroll taxes organizations do not exist for profit motive, hence called as feel free contact... We tend to have because of the pastor can be waived on goods imported for a Payer. Politically motivated a non-profit do ngos pay tax in ghana thereof in a quarterly or monthly period ; s responsibility to file monthly returns. Such exercises as politically motivated to address in this contribution are as follows: 100,000+50,000+Undisclosed Income=500,000+100,000 the foregoing the. Locally manufactured or imported foregoing, the Life style indicator of the tax law to! 12A & amp ; 80g, and '', ( new Date ( ) ) Congratulations. 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