This report covers changes to Ghana’s personal tax rate and the income bands to which the rates apply.
Recent changes to Ghana’s personal income tax regime have brought about a reduction in the highest marginal personal income tax rate for resident individuals.1
A key measure is the reduction in the 35-percent maximum income tax rate – which was introduced on 1 August 20182 – to 30 percent. The annual maximum tax band on which the rate of 30 percent applies has also been expanded to chargeable income exceeding GHS 240,000 (previously, income exceeding GHS 120,000).
The revised personal income tax regime took effect from 1 January 2019.
With the lowering of the maximum tax rate and the expansion of the annual maximum tax band, employees who have been subject to the maximum rate will now potentially experience savings of an estimated GHS 12,396 per annum plus 5 percent on additional chargeable income exceeding the GHS 240,000.
There will be a reduction in assignment-related tax costs in respect of assignees into and out of Ghana, subject to Ghanaian tax law.
Employers may need to consider their budget projections for assignments due to the changes.
Furthermore, employers may need to make the necessary payroll adjustments and update hypothetical taxes for tax equalized assignees.
The revised graduated tax rates and bands effective from January 1. 2019, are shown below:
|Chargeable Income Tax||Annual (GHS)
Source: KPMG, Ghana
The tax rate applicable to nonresident individuals has however been maintained at 25 percent from the last revision in August 2018.
The new rules give rise to the following tax incentives and savings:
This presents the below tax savings:
|Tax Band||Tax Savings per annum GHS|
|30%||12,396 plus 5% on additional income exceeding GHS 240,000|
Source: KPMG, Ghana
* Minimum wage earners are individuals who earn GHS 10.65 a day
An individual is deemed resident for a year of assessment if that individual is:
1 The Tax (Amendment) (No.2) Act, 2018 (Act 979), which amends the graduated tax rates for resident individuals in the First Schedule of the Income Tax Act, 2015 (Act 896).
2 For coverage of the changes in August 2018, see GMS Flash Alert 2018-108 (21 August 2018).
* * * *
GHS 1 = EUR 0.178
GHS 1 = GBP 0.155
GHS 1 = NGN 73.38
The information contained in this newsletter was submitted by the KPMG International member firm in Ghana.
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