Taxation of international executives
This document sets out the general tax regime in relation to international executives in Ghana. It therefore gives insight into the Ghana Tax Law requirements in relation to employment and other related taxes.
Under the Income Tax Act 2015, (Act 896), income tax is payable for each year of assessment by a person who has chargeable income for the year and a person who receives a final withholding payment during the year. In relation to employment, a person is taxed on all gains or profits from that employment, unless the gain or profit is specifically exempt. Any amount, benefit or allowance is a gain or profit from the employment if it is provided:
International Executives who exercise employment in Ghana will be subject to tax on all benefits that shall be attributable to them as a result of the exercise of the employment irrespective of who pays them or where they are paid from. To the extent that, the income has a source in Ghana or the individual has a Ghanaian permanent establishment and the income earned is connected with the permanent establishment, irrespective of the source of the income.
Taxes on employment income are administered through the Pay-As-You-Earn system. By this, the employer is required to withhold tax on the gains or profits attributable to the employee and pay same to the Ghana Revenue Authority on monthly basis on or before the 15th of every ensuing month in which the payment was made.
Expatriates are also required to make social security contributions in Ghana according to the National Pensions Act, 2008(Act 766). The Act establishes a contributory three-tier pension scheme consisting of:
1. A mandatory basic national social security scheme (Tier 1);
2. A mandatory fully funded and privately managed occupational pension scheme (Tier 2), and
3. A voluntary fully funded and privately managed provident fund and personal pension scheme (Tier 3).
The first two mandatory schemes (Tiers 1&2) make up a total of 18.5 percent of an assignee’s basic salary which is required to be deducted and remitted to the Pensions Authority on or before the 14th of the ensuing month in which the payment was deducted. Every individual (with no exception to expats) are required to make contributions to the Tiers 1&2 schemes. However, Expatriates contributing to social security schemes in their home countries/territories or a similar scheme and are on short term assignment (for period not exceeding 36 months), can obtain an exemption from the pensions regulatory bodies in Ghana. Once the assignee is below 45 years, it becomes compulsory to join the Tier 1 and tier 2 schemes. Expatriates who are above 45 years are, however, required to make the entire 18.5 percent contribution to the Tier 2 scheme.