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GhanaTax Guide

2012

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PKF Worldwide Tax Guide 2012I

foreword

A countrys tax regime is always a key actor or any business considering movinginto new markets. What is the corporate tax rate? Are there any incentives or

overseas businesses? Are there double tax treaties in place? How will oreign sourceincome be taxed?

Since 1994, the PKF network o independent member rms, administered by PKFInternational Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provideinternational businesses with the answers to these key tax questions. This handyreerence guide provides clients and proessional practitioners with comprehensivetax and business inormation or 100 countries throughout the world.

As you will appreciate, the production o the WWTG is a huge team eort and I

would like to thank all tax experts within PFK member rms who gave up their timeto contribute the vital inormation on their countrys taxes that orms the heart o thispublication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKFWitt Mares, and Kaarji Vaughan, PKF Melbourne or co-ordinating and checking theentries rom countries within their regions.

The WWTG continues to expand each year refecting both the growth o the PKFnetwork and the strength o the tax capability oered by member rms throughoutthe world.

I hope that the combination o the WWTG and assistance rom your local PKFmember rm will provide you with the advice you need to make the right decisionsor your international business.

Jon HillPKF (UK) LLPChairman, PKF International Tax [email protected]

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PKF Worldwide Tax Guide 2012 II

important disclaimer

This publication should not be regarded as oering a complete explanation o thetaxation matters that are contained within this publication.

This publication has been sold or distributed on the express terms and understandingthat the publishers and the authors are not responsible or the results o any actionswhich are undertaken on the basis o the inormation which is contained within thispublication, nor or any error in, or omission rom, this publication.

The publishers and the authors expressly disclaim all and any liability andresponsibility to any person, entity or corporation who acts or ails to act as aconsequence o any reliance upon the whole or any part o the contents o thispublication.

Accordingly no person, entity or corporation should act or rely upon any matter orinormation as contained or implied within this publication without rst obtainingadvice rom an appropriately qualied proessional person or rm o advisors, andensuring that such advice specically relates to their particular circumstances.

PKF International is a network o legally independent member rms administered byPKF International Limited (PKFI). Neither PKFI nor the member rms o the networkgenerally accept any responsibility or liability or the actions or inactions on the part

o any individual member rm or rms.

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PKF Worldwide Tax Guide 2012III

preface

The PKF Worldwide Tax Guide 2012 (WWTG) is an annual publication that providesan overview o the taxation and business regulation regimes o 100 o the worlds

most signicant trading countries. In compiling this publication, member rms o thePKF network have based their summaries on inormation current as o 30 September2011, while also noting imminent changes where necessary.

On a country-by-country basis, each summary addresses the major taxes applicableto business; how taxable income is determined; sundry other related taxationand business issues; and the countrys personal tax regime. The nal section oeach country summary sets out the Double Tax Treaty and Non-Treaty rates o taxwithholding relating to the payment o dividends, interest, royalties and other relatedpayments.

While the WWTG should not to be regarded as oering a complete explanation othe taxation issues in each country, we hope readers will use the publication as theirrst point o reerence and then use the services o their local PKF member rm toprovide specic inormation and advice.

In addition to the printed version o the WWTG, individual country taxation guides areavailable in PDF ormat which can be downloaded rom the PKF website at www.pk.com

PKF INTERNATIONAL LIMITEDAPRIL 2012

PKF INTERNATIONAL LIMITEDALL RIGHTS RESERVEDUSE APPROVED WITH ATTRIBUTION

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PKF Worldwide Tax Guide 2012 IV

about pKf international limited

PKF International Limited (PKFI) administers the PKF network o legally independentmember rms. There are around 300 member rms and correspondents in 440

locations in around 125 countries providing accounting and business advisory services.PKFI member rms employ around 2,200 partners and more than 21,400 sta.

PKFI is the 10th largest global accountancy network and its member rms have $2.6billion aggregate ee income (year end June 2011). The network is a member o theForum o Firms, an organisation dedicated to consistent and high quality standards onancial reporting and auditing practices worldwide.

Services provided by member rms include:

Assurance & AdvisoryCorporate FinanceFinancial PlanningForensic AccountingHotel ConsultancyInsolvency Corporate & PersonalIT ConsultancyManagement ConsultancyTaxation

PKF member rms are organised into ve geographical regions covering Arica; LatinAmerica; Asia Pacic; Europe, the Middle East & India (EMEI); and North America &the Caribbean. Each region elects representatives to the board o PKF InternationalLimited which administers the network. While the member rms remain separateand independent, international tax, corporate nance, proessional standards, audit,hotel consultancy, insolvency and business development committees work together toimprove quality standards, develop initiatives and share knowledge and best practicecross the network.

Please visit .pkf.com or more inormation.

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PKF Worldwide Tax Guide 2012V

structure of country descriptions

a. taXes payable

FEDERAL TAXES AND LEVIESCOMPANY TAXCAPITAL GAINS TAXBRANCH PROFITS TAXSALES TAX/VALUE ADDED TAXFRINGE BENEFITS TAXLOCAL TAXESOTHER TAXES

b. determination of taXable income

CAPITAL ALLOWANCESDEPRECIATIONSTOCK/INVENTORYCAPITAL GAINS AND LOSSESDIVIDENDSINTEREST DEDUCTIONSLOSSESFOREIGN SOURCED INCOME

INCENTIVES

c. foreiGn taX relief

d. corporate Groups

e. related party transactions

f. witHHoldinG taX

G. eXcHanGe control

H. personal taX

i. treaty and non-treaty witHHoldinG taX rates

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PKF Worldwide Tax Guide 2012 VI

A

Algeria . . . . . . . . . . . . . . . . . . . .1 pm

Angola . . . . . . . . . . . . . . . . . . . .1 pm

Argentina . . . . . . . . . . . . . . . . . .9 am

Australia -

Melbourne . . . . . . . . . . . . . 10 pm

Sydney . . . . . . . . . . . . . . .10 pm

Adelaide . . . . . . . . . . . . 9.30 pm

Perth . . . . . . . . . . . . . . . . . .8 pm

Austria . . . . . . . . . . . . . . . . . . . .1 pm

B

Bahamas . . . . . . . . . . . . . . . . . . .7 am

Bahrain . . . . . . . . . . . . . . . . . . . .3 pm

Belgium . . . . . . . . . . . . . . . . . . . .1 pm

Belize . . . . . . . . . . . . . . . . . . . . .6 amBermuda . . . . . . . . . . . . . . . . . . .8 am

Brazil. . . . . . . . . . . . . . . . . . . . . .7 am

British Virgin Islands . . . . . . . . . . .8 am

C

Canada -

Toronto . . . . . . . . . . . . . . . . 7 am

Winnipeg . . . . . . . . . . . . . . . 6 amCalgary . . . . . . . . . . . . . . . . 5 am

Vancouver . . . . . . . . . . . . . . 4 am

Cayman Islands . . . . . . . . . . . . . .7 am

Chile . . . . . . . . . . . . . . . . . . . . . .8 am

China - Beijing . . . . . . . . . . . . . .10 pm

Colombia . . . . . . . . . . . . . . . . . . . 7 am

Croatia . . . . . . . . . . . . . . . . . . . .1 pm

Cyprus . . . . . . . . . . . . . . . . . . . .2 pmCzech Republic . . . . . . . . . . . . . . 1 pm

D

Denmark . . . . . . . . . . . . . . . . . . .1 pm

Dominican Republic . . . . . . . . . . .7 am

E

Ecuador . . . . . . . . . . . . . . . . . . . .7 amEgypt . . . . . . . . . . . . . . . . . . . . .2 pm

El Salvador . . . . . . . . . . . . . . . . . 6 am

Estonia . . . . . . . . . . . . . . . . . . . .2 pm

F

Fiji . . . . . . . . . . . . . . . . .12 midnight

Finland . . . . . . . . . . . . . . . . . . . .2 pm

France. . . . . . . . . . . . . . . . . . . . .1 pm

G

Gambia (The) . . . . . . . . . . . . . 12 noon

Georgia . . . . . . . . . . . . . . . . . . . .3 pm

Germany . . . . . . . . . . . . . . . . . . .1 pm

Ghana . . . . . . . . . . . . . . . . . . 12 noon

Greece . . . . . . . . . . . . . . . . . . . .2 pm

Grenada . . . . . . . . . . . . . . . . . . .8 am

Guatemala . . . . . . . . . . . . . . . . . . 6 am

Guernsey . . . . . . . . . . . . . . . . 12 noon

Guyana . . . . . . . . . . . . . . . . . . . .7 am

H

Hong Kong . . . . . . . . . . . . . . . . .8 pm

Hungary . . . . . . . . . . . . . . . . . . .1 pm

I

India . . . . . . . . . . . . . . . . . . . 5.30 pm

Indonesia. . . . . . . . . . . . . . . . . . .7 pm

Ireland . . . . . . . . . . . . . . . . . . 12 noon

Isle o Man . . . . . . . . . . . . . . 12 noon

Israel . . . . . . . . . . . . . . . . . . . . . .2 pm

Italy . . . . . . . . . . . . . . . . . . . . . .1 pm

J

Jamaica . . . . . . . . . . . . . . . . . . .7 am

Japan . . . . . . . . . . . . . . . . . . . . .9 pm

Jersey . . . . . . . . . . . . . . . . . . 12 noon

Jordan . . . . . . . . . . . . . . . . . . . .2 pm

K

Kazakhstan . . . . . . . . . . . . . . . . .5 pm

Kenya . . . . . . . . . . . . . . . . . . . . .3 pm

Korea . . . . . . . . . . . . . . . . . . . . .9 pm

Kuwait . . . . . . . . . . . . . . . . . . . . .3 pm

L

Latvia . . . . . . . . . . . . . . . . . . . . .2 pm

Lebanon . . . . . . . . . . . . . . . . . . .2 pm

Liberia . . . . . . . . . . . . . . . . . . 12 noon

Luxembourg . . . . . . . . . . . . . . . .1 pm

M

Malaysia . . . . . . . . . . . . . . . . . . .8 pm

Malta . . . . . . . . . . . . . . . . . . . . .1 pm

Mauritius . . . . . . . . . . . . . . . . . . .4 pm

Mexico . . . . . . . . . . . . . . . . . . . .6 am

Morocco . . . . . . . . . . . . . . . . 12 noon

N

Namibia. . . . . . . . . . . . . . . . . . . .2 pm

Netherlands (The) . . . . . . . . . . . . .1 pm

New Zealand . . . . . . . . . . .12 midnight

Nigeria . . . . . . . . . . . . . . . . . . . .1 pm

Norway . . . . . . . . . . . . . . . . . . . .1 pm

O

Oman . . . . . . . . . . . . . . . . . . . . .4 pm

P

Panama. . . . . . . . . . . . . . . . . . . .7 am

Papua New Guinea. . . . . . . . . . .10 pm

Peru . . . . . . . . . . . . . . . . . . . . . .7 am

Philippines . . . . . . . . . . . . . . . . . .8 pm

Poland. . . . . . . . . . . . . . . . . . . . .1 pm

Portugal . . . . . . . . . . . . . . . . . . .1 pm

Puerto Rico . . . . . . . . . . . . . . . . . 8 am

international time Zones

AT 12 NOON, GREENwICH MEAN TIME, THE sTANDARD TIMEELsEwHERE Is:

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PKF Worldwide Tax Guide 2012VII

Q

Qatar. . . . . . . . . . . . . . . . . . . . . .8 am

R

Romania . . . . . . . . . . . . . . . . . . .2 pmRussia -

Moscow . . . . . . . . . . . . . . .3 pm

St Petersburg . . . . . . . . . . . .3 pm

s

Sierra Leone . . . . . . . . . . . . . 12 noon

Singapore . . . . . . . . . . . . . . . . . .7 pm

Slovak Republic . . . . . . . . . . . . . .1 pmSlovenia . . . . . . . . . . . . . . . . . . .1 pm

South Arica . . . . . . . . . . . . . . . . .2 pm

Spain . . . . . . . . . . . . . . . . . . . . .1 pm

Sweden . . . . . . . . . . . . . . . . . . . .1 pm

Switzerland . . . . . . . . . . . . . . . . .1 pm

T

Taiwan . . . . . . . . . . . . . . . . . . . .8 pmThailand . . . . . . . . . . . . . . . . . . .8 pm

Tunisia . . . . . . . . . . . . . . . . . 12 noon

Turkey . . . . . . . . . . . . . . . . . . . . .2 pm

Turks and Caicos Islands . . . . . . .7 am

U

Uganda . . . . . . . . . . . . . . . . . . . .3 pm

Ukraine . . . . . . . . . . . . . . . . . . . .2 pmUnited Arab Emirates . . . . . . . . . .4 pm

United Kingdom . . . . . . .(GMT) 12 noon

United States o America -

New York City . . . . . . . . . . . .7 am

Washington, D.C. . . . . . . . . .7 am

Chicago . . . . . . . . . . . . . . . . 6 am

Houston . . . . . . . . . . . . . . . . 6 am

Denver . . . . . . . . . . . . . . . .5 amLos Angeles . . . . . . . . . . . . . 4 am

San Francisco . . . . . . . . . . .4 am

Uruguay . . . . . . . . . . . . . . . . . . .9 am

V

Venezuela . . . . . . . . . . . . . . . . . . 8 am

Vietnam . . . . . . . . . . . . . . . . . . . .7 pm

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PKF Worldwide Tax Guide 2012 1

Ghana

GHana

Currency: Ghanaian Cedi Dial Code To: 233 Dial Code Out: 00 (Gh)

Member Firm:City: Name: Contact Inormation:Accra Frederick Bruce-Tagoe 21-221266

[email protected]

a. taXes payable

In 2001, a new tax law, The Internal Revenue Act 2000 (Act 592), was passed toadminister Direct Taxes. The Internal Revenue Regulations, 2001 (L. I. 1675) was also

introduced. There have been a number o amendments to the law and regulations.

The only notable national levies in the country are:a) the National Health Insurance Levy o 2.5% imposed on certain goods and

servicesb) The National Fiscal Stabilization Levy o 5% imposed on prot beore tax o

companies and institutions o certain listed sectors o the economy.

The National Health Insurance Levy is administered on the lines o the value added

tax.

Taxes consist o the income taxes, sales and service taxes administered by theDomestic Tax Revenue Division (DTRD) o the Ghana Revenue Authority (GRA) andcustoms and excise duties administered by the Customs Division (CD) o the GRA.

COMPANY TAXUnless specically exempted in the law, companies (both resident and non-resident)are required to pay tax on income relating to business and investment, derived rom,accrued in, brought into or received in Ghana ater the necessary adjustment aremade. The rate o tax is generally 25%. There are dierent rates applicable to certaincompanies (reer to Incentives below). From 2012, mining companies are to paycorporate tax at a rate o 35%.

The proposed amendment to the tax law to compel institutions with tax-ree statuspay tax on income rom commercial activities was not eected.

The corporate entity is taxed separately rom its share holders.

All companies have to le returns our months ater their accounting year. It is alsorequired that they make quarterly tax payment on the current years income basedon provisional assessment made by the DTRD or the company itsel (where the DTRDhas granted that permission).

CAPITAL GAINs TAXBusinesses are required to pay tax on gains made on realisation o chargeable assets.Chargeable assets include land (which is not or agriculture in Ghana), buildings, shares,goodwill and business assets, among others.

Chargeable assets do not include trading stock, securities o a company listed on theGhana Stock Exchange during the rst 15 years o the establishment o the StockExchange, Classes 1, 2, 3 and 4 assets (e.g. vehicles, plant and machinery, air and seatransport, computers, etc).

EXEMPTIONsThe ollowing exemptions apply:(1) gains derived rom mergers, amalgamations or re-organisation o the company

where there is continuity o underlying ownership in the asset o at least 25%

(2) capital gains o up to Gh 50.00(3) where the person uses up the amount received to acquire a replacement asset(4) transer o ownership o an asset to a ormer spouse in divorce settlement or

genuine separation(5) transer o asset to spouse or certain relatives.

The capital gain is calculated as the excess o consideration received rom therealization over the cost base o the asset at the time o realisation. The tax isimposed at the rate o 15%.

Attention is now devoted to appreciation in owner capital arising rom changes inownership structure through takeover and acquisition.

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PKF Worldwide Tax Guide 20122

BRANCH PROFITs TAXA branch o any oreign company doing business in Ghana is taxed like any corporateentity in Ghana. With the aim o preventing tax avoidance schemes (such as transerpricing, thin capitalisation and income-splitting), the Commissioner o the IRS is

entitled to adjust chargeable income o the branch on the basis o the turnover o thewhole group. Where it repatriates its branch prot ater tax, it will be required to pay10% tax on the amount repatriated. This is in addition to any corporate tax paid.

sALEs TAX/ VALUE ADDED TAX (VAT)These are indirect taxes paid by consumers on some goods and services to the statethrough registered individuals or businesses. The rate is 12.5% or businesses andindividuals whose turnover or a 12 month period is GH120,000 or above on thevalue o goods and services. This excludes the National Health Insurance Levy o2.5%.

Businesses and individuals whose turnover or a 12 month period alls belowGH120,000 are to pay a presumptive tax o 6% o their turnover. (No input or outputVAT is computed.) There are exemptions specied in the VAT law. Exempt suppliesinclude agricultural products and inputs, printed matter, approved medical andpharmaceutical supplies, transport, nancial services, land, building and construction.

Imports are taxable. Exports are zero rated. Under Excise Duty, the rate orEnvironmental Tax has been reduced rom GH 20% to GH15%. Also excise duty

rates are to be reduced on a sliding scale to companies using local raw materials assubstitutes in the production o excisable goods.

FRINGE BENEFITs TAXWith the exception o dental, medical, and health insurance expenses, all ringebenets derived rom employment are taxable. Benets relating to accommodationand cars have their own treatment specied in the Tax Law. For all other benets,the open market value or a reasonable value is added to taxable income and subjectto tax. For some services provided to its employees (e.g. ood oered in a canteen,oce outings, transportation o employees, accident insurances and payments toretirement unds), the employer has the option to pay the income tax on account orthe employee.

LOCAL TAXEsThese are collected by the District, Municipal and Metropolitan Assemblies(authorities) rom persons doing business within their localities. They are alsoresponsible or the collection o property rates.

OTHER TAXEs

GIFT TAXSubject to certain exemptions, git tax is payable by every person on the total value otaxable gits received by the person by way o gits within a year o assessment. Therate ranges rom 5% to 15%.

sTAMP DUTYStamp duty is paid (at various rates) by a person who undertakes certain transactionsincluding the ollowing:(a) conveyance or transer on the sale o any property(b) appointment o a new trustee(c) natural resource lease or licence (e.g. mining and timber)(d) agreement or memorandum o agreement(e) award o cost in a matter o dispute() bill o exchange (e.g. issue o cheques)(g) bill o lading(h) insurance policy.

MINERAL ROYALTIEsHolders o mining leases are required to pay royalties at specied rates to the

Government on monthly basis but not on quarterly basis.

COMMUNICATION sERVICE TAXThis is a tax on communication service providers based on turnover. The coverage othis tax has been extended to include the ollowing:a. Public/corporate data operatorsb. Providers o radio(FM) broadcasting servicesc. Providers o ree-to-air television services.

TAX sTAMPThis a tax imposed on operators in the inormal sector. The amount paid is based onturnover and nature o product but not on prot.

Ghana

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VEHICLE INCOME TAXThis is a tax imposed on commercial vehicles. It is paid quarterly.

AIRPORT TAX

This is imposed on both domestic and international travels. It varies depending on thepassenger class and the place o destination.

The current rates are:Domestic travel $5Regional travel within West Arica $60International travela) Economy class travel outside West Arica $100b) Business class travel outside West Arica $150c) First class travel outside West Arica $200

NATIONAL FIsCAL sTABILIZATION LEVYThis levy was imposed on businesses in 2009 but has been abolished rom January 2012.

wINDFALL TAXMining companies pay a windall tax o 10%.

TAX AMNEsTYEective 1 January 2012 a tax amnesty is granted to companies and individuals who

have evaded taxes. This concession expires on 30 September 2012.

b. determination of taXable income

Chargeable income o a person is dened in the Internal Revenue Act 2000 (Act 592)as: the total o a persons assessable income, rom each business, employment, andinvestment, less the total amount o deductions allowed to that person or the year undersections 13 to 22 (relating to general and specic deductions), s 39 (relating to relies),s 57 (relating to lie insurance), and s 60 (relating to contributions to retirement unds).

CAPITAL ALLOwANCEsCapital allowances are granted in respect o xed assets (depreciable assets), bothtangible and intangible, acquired by persons in businesses or each year o assessment.To qualiy or these allowances, however, the ollowing conditions must be met:(a) the assets should be capital in nature(b) the asset should be owned by the business(c) the asset should be in the business up to the end o the year(d) the asset should be used in carrying on business during the period(e) the Commissioner o IRS should be inormed o any new asset acquired one

month ater its usage in the business.

Depreciable assets are categorised into six classes. Classes (Pools) 14 assets areput in dierent pools and depreciated at various rates ranging rom 20% to 80% onreducing- balance method. Class 5 (buildings) attract a rate o 10% on cost and Class 6(intellectual or industrial property) is depreciated over its estimated useul lie.

Cla Aet Rate

1 Computers and data handling equipment 40%

2Automobiles, plant and machinery used inmanuacturing

30%

Assets in respect o long term crop plantingcosts

30%

3 (1)Assets relating to minerals and petroleumIndustry

80% o cost in year opurchase and 50% eachyear thereater

4

Rail, water and air transport, plant and

machinery, xtures, urniture and equipment,and any other asset not included in any otherclass

20%

5Buildings, structures and works o permanentnature other than those in Class 3

10% (straight line)

6 Intangible assets other than those in Class 3 Estimated use lie

(1) the second year o any new asset, 5% ocost o asset is added to the written down

value.

Ghana

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From 2012, mining and oil companies are to have a uniorm regime or capitalallowance o 20% or ve years.

DIsPOsAL

When an asset belonging to Classes 1 to 4 is disposed o, the realised value is taken outo the class it came out rom beore the rate o capital allowance is applied on the residue.Where the sale o an asset leads to the wiping o o the written-down value o the poolbut there is still an excess o the disposal proceeds, the excess is included in the incomeo the year and taxed. Where all assets in a pool are disposed o but there are not enoughproceeds to take care o the written down value, capital allowance is granted on theoutstanding written down value to reduce the pool to zero at the end o the year.

In case o Classes 5 and 6 assets, a dierent method is adopted. This method ensuresthat businesses recover cost in the case o a loss on disposal and are also not overly taxed

in the case o gains.

CAPITAL ALLOwANCE ON LEAsED AssETsThe lessee o an asset, whether under nance or operating lease, is not entitled tocapital allowance on the asset. The rental payments made to the lessor are treated asallowable expense or tax purposes.

In the case o the lessor, capital allowance is claimed under an operating lease. Theull amount o rent received is included in the lessors income or the year. Where the

arrangement is a nance lease, the lessor does not qualiy or capital allowance. Theamount o rent payment included in taxable income or the year is reduced by capitalamounts determined by the Commissioner.

DEPRECIATIONDepreciation o any xed asset is not an allowable deduction in arriving at theassessable income. This is compensated or by the granting o capital allowance.

sTOCK/INVENTORYFor the purpose o tax, stock and work in progress is valued at the lower o costor market value. However, any method o stock valuation accepted by accountingprinciple that is consistently applied is accepted.

CAPITAL GAINs AND LOssEsGains or Losses on disposal o assets, as reported in nancial statements, are not taxableor allowable respectively. Gains are deducted rom prots and losses added to prots.This is in line with the IRS law that does not recognise depreciation policies set out bybusinesses. The pool system adopted by the IRS or capital allowance purposes makesit almost impossible to ascertain whether a loss or gain was made on the disposal o a

particular asset. However, there are adequate provisions or recovery o ull cost o xedassets disposed o (reer to disposal o xed assets under Capital allowance). Classes 1 to4 assets do not attract capital gains tax on disposal. Assets disposed o are subject to VAT.

DIVIDENDsA tax is paid by a resident or non-resident person or partnership who or which is paid adividend by a resident company, other than exempt dividends, at 8%. A capitalisation oprot is treated as dividend paid to each o the companys shareholders in proportion totheir respective interest in the company and is taxed at 8%.

Where a company (controlled by not more than ve persons) records prot over areasonable period but does not declare dividends, the Commissioner has the authorityto treat part o the company income as distributed and demand tax on dividends.

EXEMPTIONDividends paid by a resident company to another resident company where the recipientcompany controls directly or indirectly 25% o the voting power o the company payingthe company are exempt. This exemption does not apply i the dividend paid is intendedas a prot or dividend stripping arrangement.

INTEREsT DEDUCTIONsInterest incurred in respect o a borrowing employed by a business entity in theproduction o an income is a deduction allowed or the purpose o ascertaining theassessable income o the person.

LOssEsTAX LOssEsTax losses are arrived at ater adjusting losses reported in nancial statements in

line with tax principles. Manuacturing industries which export their products andarming and mining concerns are allowed to deduct the losses over a ve-year periodsubsequent to the year in which the loss was incurred.

Ghana

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FOREIGN CURRENCY EXCHANGE LOssEsAny oreign currency exchange loss, other than a loss o capital nature, in respect o anydebt claim, debt obligation, or oreign currency holding, incurred or the purpose o producingan income is an allowable deduction but subject to the ulllment o certain conditions.

FOREIGN sOURCED INCOMEForeign sourced income brought into or received in Ghana by resident persons isincluded in that persons income or the year and taxed. However, the person is allowedthe deduction o oreign tax credits or entitled to some relies where there is a doubletaxation agreement.

INCENTIVEsThere are a number o incentives provided or in the IRS law and other laws andenactments geared towards the development o certain sectors o industry and

o certain parts o the country. These incentives include reduced rate o taxes,exemption rom the payment o duties and other taxes or specied periods, higherrate o capital allowance, among others. These cannot be exhaustibly dealt with butbelow are a ew o such concessions granted.

1. Carry Over LoeThis applies to business engaged in arming, manuacturing or mining (reer toLosses above).

This concession is also to be granted to venture capital investment on losses incurredon the disposal o shares, agro-processing, tourism and ICT industries rom year 2006.

2. Locational Incentive For Manufacturing Buine

Location within Accra and Tema 25%

Location in regional capitals o Ghana 18.75%

Location in ree zone enclave 0%

Location elsewhere in Ghana 12.5%

3. Locational Incentive For Agro-Proceing BuineTax rates or manuacturing concerns vary depending upon the location o thebusiness and are as ollows:

Location within Accra and Tema 20%

Location in regional capitals o Ghana:

except the three northern regions 10%

the three northern regions 0%

Outside Regional Capitals 0%

4. sectorial Incentive (Reduced Tax Rate)Tax rates vary depending upon the area (sector or industry) rom which the income iscoming rom as shown below:

Hotel industry 20%

Export o non-traditional production 8%

Loans granted to a arming enterprise 20%

Loans granted to a leasing company 20%

Companies listed on the Ghana Stock Exchange 25%

Companies listed on the Ghana Stock Exchange ater

1 January 2004

22% (or rst

3 years)

5. Indutrial Conceion (Exemption Period)The income o a person rom the ollowing industry or sector o the economy isexempted rom tax or the years stated against them:

Farming tree crops 10 years

Livestock 5 years

Farming cattle 10 yearsProcessing business 3 years

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Rural banking 10 years

Construction or sale letting o residential premises(on condition that the company partners the Ministryor Works and Housing)

5 years

Cocoa arming Indenitely Processing o cocoa by-products 5 years

Processing o waste materials 7 years

Agro-processing 5 years

Venture capital investments (eective 2006) 5 years

Real Estate Companies (rst 5 years)

c. foreiGn taX relief

Foreign tax credits are available to relieve double taxation on overseas income.Credits are calculated separately or each source o business, employment andinvestment income and may not exceed the average rate o Ghanaian income taxo that person or the year o assessment applied to that persons taxable oreignincome or the year.

d. corporate Groups

Corporate groups, irrespective o their aliations, prepare accounts separately andare taxed separately. Capital allowance is not transerable.

e. related party transactions

Although nothing in the law disallows related party transactions, the Commissionerhas authority to disregard or reverse any transaction that is geared towards taxavoidance.

f. witHHoldinG taX

Tax is withheld at various rates or the ollowing transactions:

Income: Reident Rate

Payment o employees graduated

Directors ees 10%

Payment o interest (excluding individuals) 8%

Fees to part-time lecturers, teachers, examiners, etc 10%Payment o dividend to shareholders 8%

Commission to insurance and sales agents 10%

Commission to lottery agents and receivers 5%

Payment or goods and services supplied 5%

Rent 8%

Income: Non-Reident Rate

Management and technical service ees 15%

Royalties, natural resource payments and rents 10%

Endorsement ees 15%

Dividends 8%

Repatriated branch ater tax prots 8%

Interest 8%Short-term insurance premium 5%

G. eXcHanGe control

Ghana has an Exchange Control Act that regulates, among other things, the ollowing:a. Use o oreign exchange among residentsb. Trading in gold ( coins and/or bullion)

c. Exports and import on bank notesd. Exports and export proceedse. Capital and money market instruments.

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The DTRD Regulations set a ormula or calculating the amount o prots that aoreign company may repatriate to its home country at every point in time. There arerestrictions to the amount allowed to be repatriated.

H. personal taX

Individuals are required to pay tax on gains or prot rom employment, business orinvestment. For a resident person, he or she is to pay tax on income accruing in,derived rom, brought into, or received in Ghana, and or a non-resident person onincome accruing in, and derived rom, Ghana regardless o whether the income isreceived in Ghana. An individual is considered resident i he or she has stayed inGhana or an aggregate period o 183 days or more in any 12 month period. Allincomes are aggregated and taxed ater the various adjustments relating to the typeo income earned are made. The aggregated income excludes capital gains, gits and

rent income.

The tax rates are graduated with rates ranging rom 0% to 25%. Annual income up toGhana Cedis 1,200 is taxed at 0%. Any income in excess o Ghana Cedis 25,920 istaxed at 25%.

i. treaty and non-treaty witHHoldinG taX rates

In the absence o any treaty with the Government o Ghana, the provisions o the

income tax law applies or the treatment o all tax matters. Thus, tax rates applicableon various incomes apply. Where there is a treaty with the Government o Ghana, theterms o the treaty prevail over all provisions o the income tax law. However, wherethe rates o taxes set out in a treaty are higher than those o the laws o Ghana, thelower rates are used. Currently, notable double taxation treaties Ghana has are withthe United Kingdom, France, Italy, South Arica, Belgium and Germany.

Tax Rates in percentages are as ollows:

Income Ger-many

southAfrica

Bel-gium

Italy Nethe-rland

UK France

Technical/Managementees

8 10 10 10 8 10 10

Interest 10 10 10 10 8 12.5 10

Royalties 8 10 10 10 8 12.5 10

Dividends:

Recipient musthold at least10% shares

5 5 5 5 5 7.5 7.5

All other cases 15 15 15 15 10 15 15

PENALTIEsFILING OF RETURN OF INCOMEAny company or a sel-employed person who ails to provide a return o income tothe DTRD within the time required is liable to pay a penalty as ollows:

Company Two (2) Currency Points or each day o deault.

Sel employed One (1) Currency Points or each day o deault.

PAYMENT OF TAXThe penalties or ailure to pay tax on due date are as ollows.(a) up to three months 10% o the unpaid tax(b) exceeding three months 20% o the unpaid tax.

A urther penalty 5% o the tax and penalty shall be imposed i the total amountremains unpaid.

The penalties or ailure to withhold tax and/or ailure to pay withheld tax are asollows:(a) up to three months 20% o the unpaid amount(b) exceeding three months 30% o the unpaid amount.

A urther penalty o 5% o the tax plus penalty shall be imposed i the total amountremains unpaid.

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