I say so because, how many of our religious organisations file their annual returns with the Registrar of Companies? However, the value of the transaction is less GHS2,000 (approx.. US$420). If you own an SSBI, you also do not have to pay any profit tax. The church is required to withhold tax of US$30 on payments to the supplier and pay same to the Ghana Revenue Authority. In many countries, NGOs are exempt from paying state and federal taxes. Now we know NGO workers get paid, let . All businesses registering with the GRA, must do so at the nearest GRA district office closest to the project location. A recommended letter from the district, municipal or metropolitan assembly responsible for the area where your NGO is to be located. b. To fund development, especially public infrastructure, with any stamp of country ownership and unburdened by donor conditionalities, requires that Ghana strengthens its ability to raise domestic tax revenue; however small. 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. Construction and renovation of church premises. The highest rate is presently 35%. They establish rules governing matters including, d.Trustees and board roles people and skills. These are: b. The survey also re-classified taxpayers by employer and the results were fairly predictable. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Congratulations! Under Act 896, there are 3 key conditions that must be satisfied by a religious organisation to qualify for exemption from income tax. [Emphasis mine] Exempt organisation was defined in Section 94 to mean a person. My NGO engages in the production and sale of artefacts as a fund raising activity but auditors wants to classify that income as business income subject to tax. g.Investigation of non-compliance with charity rules; h.Establishment of charity courts; and, i. A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. However, NGOs make efforts to pay fair wages to their workers. Africa energy and utilities - Tax guide 2019. Therefore, whenever a religious organisation makes payments for, a. However, even if these agreements make a commitment to provide beneficial tax treatment, including exemptions, such commitments can only be enforced if they have effect under the relevant tax law (i.e. And this accumulated income can be used within the next five years and if not used then shall be considered as the income of the eleventh year. Governing Board, Click on the representative below to chat on WhatsApp or send us an email to info@gra.gov.gh, Copyright 2022, All Right Reserved, Ghana Revenue Authority. The person or organization will get a deduction of 50% of donation amount from the Taxable Income. Under Section 10(1)(d) of Act 592, it was provided that the income accruing to or derived by an exempt organisation other than income from any business is exempt from income tax. 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. 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. However, obtaining the charitable status does not amount to income tax exemptions. Some NGOs in Ghana generally work through volunteers and they are funded through free-will donations from people. List of Grant Funding for Individuals & Grants for NGOs. As noted earlier, the degree of compliance varied greatly in the private sector. NHIL is at a flat rate of 2.5%; GETFund is at a flat rate of 2.5%. The NGOs who generate their own income it will be pay good salary to their employers. Brochure or publication about your organization. It is believed that for the same gross income, cocoa farmers and other exporters, for example, pay more in direct taxes than private transport owners, building contractors, lawyers and consultants because of how export taxes are levied and collected. He added that NGOs also pay taxes and are checked by the Ghana Revenue Authority (GRA). She explained that this is because donors conduct quarterly monitoring of the various communities to be worked on to check if the NGOs are doing the work the grants given to them are meant for. vii. A summary of the goods and services which are exempt from VAT/NHIL and GETFund include: This classification includes all live animals such as cattle, sheep, goats, swine and poultry, but excludes horses, asses, mules, hinnies and similar exotic animals. An expense that is of a capital nature includes an expense that secures a benefit that lasts for more than twelve (12) months. First and foremost, the type of organisation should be religious in nature. The highest income tax rate payable by an individual resident in Ghana is 25%. It is the employer's responsibility to file monthly tax returns on behalf of its employees. Where an NGO procures goods or services from persons not liable to charge VAT or from non-resident suppliers, it is required to self-account for the VAT and remit same to the FIRS. The withheld tax must be paid to the Ghana Revenue Authority within 15 days following the month to which the payment relates. Income Tax Exemptions are the amounts that are reduced or removed from Income amounts because they are exempt from taxation. Business Income of a Religious Organisation. 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. So, in a word do remember to file the returns even if no tax is payable! With the above settled, the next question of interest is: what are the sources of income of the pastor that enabled him to buy the vehicles, house and shares? Again, your answer is as good as mine. Section 97(4) of Act 896 provides that income accruing to or derived by a charitable organisation is exempt from tax. Section 97(5) provides that Section 97(4) does not apply to business income of the charitable organisation [Emphasis mine]. The Registrar of Companies appears not to be enforcing the law. i.tithes and offering amounted to US$600,000. Companies limited by guarantee including NGOs are exempted from paying corporate taxes. Therefore, where the income is to the benefit of a specific individual, that income is subject to tax unless generally exempt. This was in other to include more sports and youth development activities. 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. Taxation is, by and large, the most important source of government revenue in nearly all countries. The church is required to withhold tax of US$250 on payments to the supplier and pay same to the Ghana Revenue Authority. What is the procedure for compulsory registration of a permanent establishment business in Ghana? For tax purposes, a company is a separate and distinct entity from its employees and affiliates. NGOs play a pivotal role in our society. With respect to resident persons, the income must be derived from, accrued in, brought into or received in Ghana. ", 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. 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. Such pernicious inequities in the tax burden have in the past contributed to smuggling in no small measure of exports. The annual employment income of the pastor of US$100,000 [8,333.33*12months] is subject to employment income tax (PAYE) using the graduated scale. The normal response will be Of course!. Many nonprofit organisations are taxable, but may be entitled to special rules for calculating taxable income, lodging income tax returns and special rates of tax - see 'Income tax exemption' on page 10. Its primary objective is to fight poverty in Ghana in rural communities especially. 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. An honorarium is considered employment income for income tax purposes and is therefore subject to deductions. 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 I speak now, I dont believe Im rich, but, maybe if you go and pick someone from the community where I work, they will say Im rich because I have a driver who comes with a Prado, but they tend to forget that we passed through rural communities, he said. NGOs might focus on activities in areas involving health or health emergencies, education, infrastructure, advocacy of minority rights, support of the poor, and the reduction of crime. In terms of donor funding, in the current world that we are in, every penny of the donor must be accounted for. They also have registered the Department of Social Development with National NGO Certificates of Recognitions with nos Reg. Given our history in the early 1980s, such cynicism is understandable. Treatment of an Honorarium as Employment Income. Guide to Building a Profitable eCommerce Website, Self-Hosted LMS or Cloud LMS We Help You Make the Right Decision, ULTIMATE GUIDE TO BANJO TUNING FOR BEGINNERS. d.Taxation of the Business and Investment Income of Religious. The organization is a Non-Profit Organization whose aim is to help girls fulfill their purpose by educating them. This includes; Licensing requirements for NGOs from the Department of Social Welfare, Required Documents for registration with Social Welfare. Roger Federer. b. Ordinary meaning can, therefore, be given to the stream of income attributable to religious organisations that are exempt from tax. As already indicated, the Constitution of Ghana, 1992, the Income Tax Act, and the Holy Bible all require a pastor, as a man of God and a good citizen, to disclose his income to the Ghana Revenue Authority for an assessment to be made in compliance with law. The CG is, therefore, an administrative officer within the meaning of Article 23 of the Constitution, 1992. The maximum income tax rate in 2015 for single big earners is 39.6% on income over $413,200, amounting to tax due from Mayweather of about $120 million, barring any tax deductions he could claim. Sympathy International is owned and managed by a Ghanaian-owned Non- Governmental Organization (N.G.O). NGOs are required to charge VAT on all taxable goods and services supplied and remit same to the FIRS as at when due. Section 10(2) of Act 179 goes on to provide for sanction for officers, members of the company and the company itself should it carry out activities for the purpose of making profit. 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. A deduction to the extent of 50% of the contribution can be made if so has been made to either of the following: b) The Prime Ministers Drought Relief Fund. publishing, and training); vi. The use of a pastor is by no means an attempt to limit the taxation to only churches and/or pastors. The entity has a written constitution that prohibits that entity from, i.engaging in a party political activity, supporting a political party or using its platform to engage in party politics, ii. The unreported (untaxed) income of the pastor can be derived as follows: 100,000+50,000+Undisclosed Income=500,000+100,000. Religious organisations and their leaders have come under intense scrutiny in recent times from the public as to whether or not their incomes should be subjected to tax. Some local NGOs do pay as normal SMEs do, with some graduate level positions calling for as low as 25K when international NGOs will pay more than 50K for the same position. This can be done where the operating vehicle is through the establishment of Trusts, for example. Gifts derived in course of employment, business and investment; Now, where a religious leader acquires property or makes investment in his own name, the question that must be asked is; what is the source of income of the person? The net amount due to the supplier is US$970. You have entered an incorrect email address! We should, therefore, consider having similar Charity Commission established by an Act of Parliament in Ghana and tweak it to meet our needs. The CG is appointed by the President in compliance with section 13(1) of the Ghana Revenue Authority Act, 2009, Act 791. Therefore, the applicable withholding tax rate is 15%. The purpose of the law with regards to the activities of religious organisations is to, among others, specifically empower the CG to approve an entity as a religious organisation, revoke the approval for a good cause or in contravention of the requirement of the law. Notwithstanding the above, there are avenues or vehicles through which religious organisations can engage in profit-making activities without contravening any law. This resource describes the legal framework governing nonprofit organizations (also known as non-governmental organizations or NGOs) in Uganda, . For PwC updates on tax and other matters do follow @pwc_tz or visit our website www.pwc.co.tz. Scholarships for Study in Africa Scholarships for African Students Undergraduate Scholarships African Women Scholarships & Grants Developing Countries Scholarships . Regional Coordinating Council, Ministries, Accra, Ghana. The predefined criteria include being a resident entity of public character that is established for relief of poverty or distress of the public, advancement of education, or provision of general public health, education, water or road construction or maintenance. Derived from property held under trust for a charitable purpose, which tends to promote international welfare in which India is interested, To the extent income is applied to such charitable or religious purposes outside India.Exemption is available only if the Board has directed such exemption, Income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution. The surplus can either be carried forward to the succeeding years without any kind of limitation or accumulated for a specific purpose. First, personal income tax compliance is unevenly enforced across different sectors of the economy and by occupations. Do non-profit/ non-governmental organisations (NGOs) deserve a special tax regime? Following the month to which the payment relates that NGOs also pay taxes and are do ngos pay tax in ghana by the Revenue... Ghana is 25 % Section 97 ( 4 ) of Act 896, are. 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