Ghana – Amendments to Personal Income Tax System Are Enacted

Ghana – Amendments to Personal Income Tax System Are

This report covers recent changes to Ghana’s personal income tax regime which include the introduction of a new top income tax rate and a rise in the tax rate applicable to nonresident individuals.

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Emmanuel Asiedu

Partner, Tax and Regulatory Services

KPMG in Ghana

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In this GMS Flash Alert, we report on recent changes to Ghana’s personal income tax regime which include the introduction of a new top income tax rate.  This follows the approval of the 2018 Mid-Year Budget Review and subsequent gazette notification issued on 1 August 2018, to amend certain paragraphs of the First Schedule of the Income Tax Act, 2015 (Act 896).

WHY THIS MATTERS

Tax costs and budgeting for assignments to and from Ghana could be affected by the modification in income tax rates and bands (which we discuss further below).  With the new top rate of tax, employers with high-income assignees to and from Ghana who are subject to Ghana income tax may see their assignment costs increase.  

Employers may need to make the necessary payroll adjustments and update hypothetical taxes for tax equalized assignees.

Residents: Rates & Bands

A new 35-percent tax rate has been included in the graduated tax bands to be applied on chargeable income exceeding GHS 120,000 per annum.  The amended graduated tax rates are as shown on the next page. 

 

 Chargeable Income Tax     
  (Annual) Rates
  GHS  
First 3,132 Nil
Next  840 5%
Next  1,200 10%
Next 33,720 17.5%
Next 81,108 25%
Next 120,000 35%

Next 1,200 10% Next 33,720 17.5% Next 81,108 25% Exceeding 120,000 35% The erstwhile tax table, which was effective from 1 January 2018 to 31 July 2018, was identical except for the imposition of the 35-percent rate.  Then, the top rate was 25 percent applying to income over GHS 38,892.

Nonresidents: Rates & Bands

The tax rate applicable to nonresident individuals has been increased from a flat rate of 20 percent to 25 percent of the chargeable income for a year of assessment.

In Brief: Who Is Resident?

An individual is deemed resident for a year of assessment if that individual is: 

  • a citizen of Ghana (other than one with a permanent residence outside Ghana who lives in that home for the whole year of assessment); 
  • present in Ghana for a period, or periods, amounting in total to 183 days or more in any 12-month period that commences or ends during the year of assessment; 
  • an employee or official of the Ghana government on a posting abroad; 
  • a citizen who is temporarily absent from Ghana for not more than three hundred and sixty-five (365) continuous days (where the individual has a permanent home in Ghana). 

GHS 1 = USD 0.207

GHS 1 = EUR 0.179  

GHS 1 = GBP 0.161  

The information contained in this newsletter was submitted by the KPMG International member firm in Ghana.

© 2022 KPMG a partnerships established under Ghanaian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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