This will help the efforts in bringing sanity in terms of the objects of religious organisations, how they operate, among others. 1. Exempt amounts include: Salary, allowances, facilities, pension and gratuity of the President; Income directly connected to the Government or local authorities' activities; What are non governmental organizations in Ghana? The 1947 Ordinance outlined the first provision of exemption from tax by charitable organisations including religious organisations. By occupational classification, the highest compliance rate could be found among those who worked in administrative and managerial positions, professional and technical skills jobs, and those in clerical jobs. A026/10/22. The organization is working in Associations business activities. It applies to Mallams, Imams, Traditional Priest (e.g. The Department of Social Development under the Ministry of Gender, Children and Social Protection does not have the power and legal backing to deal with these pertinent issues. The increase in tax revenue since the early 1990s is often cited as one of the achievements of Ghanas economic reform; thanks to increase in the base of taxation, changes made to the tax structure, and reorganization of the tax institutions. The CG is, therefore, an administrative officer within the meaning of Article 23 of the Constitution, 1992. provision of services (such as hiring out of venues and facilities of the religious organisation); v.selling of in-house expertise to interested persons (e.g. As well as paying tax in Namibia, you might also still be eligible to pay some . This combination undermines the growth of domestic revenues. Failure to withhold taxes is an infringement of the law which exposes the organisation to penalties and interest surcharges. . Failure by an entity to file an income tax return will automatically result in a late filing penalty (calculated at a monthly rate of TZS 225,000 ). I say so because, how many of our religious organisations file their annual returns with the Registrar of Companies? This classification should, however, be distinguished from zero-rated supplies. E Plaza 2 Building, Accra, Ghana, P.O.BOX AN 16859, Accra North Ghana, Accra. Taxable supplies include sale of anointing oil, bottled water, consultancy services, rental of premises, training, sale of magazines, diaries, calendars, stationery, Bible, and Quran. Reliefs in the fifth Schedule have been revised as follows: The general Corporate Income Tax rate is 25%. Articles designed exclusively for use by the disabled. It maintained the tax exemption status for religious organisations under Section . Taxation is, by and large, the most important source of government revenue in nearly all countries. 5. A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. The second question that needs answering is, whether or not the business income of a religious organisation generated incidental to its purpose of a public character without private benefit to some individuals be subject to tax? 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. The highest income tax rate payable by an individual resident in Ghana is 25%. Given our history in the early 1980s, such cynicism is understandable. Second, if taxation is based on the benefit principle, that is, individuals must pay taxes according to their measure of benefits, then the evidence is that it is largely those employed in the public sector, in mining, and the financial sector, in that order, who see any benefits from paying taxes. it was established and registered in December 2001 with the Registrar Generals Department and the Department of Social Welfare. The School is not into the business of rental of commercial premises. What concerns us now is the degree of compliance. The religious organisation must also apply to the CG for the grant of the status of being a religious organisation as a way of serving as check and balances to curtail abuse of the tax exemption process. Address description of the subscriber. Now we know NGO workers get paid, let . Taxes for Companies Limited by Guarantee in Ghana. 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 resources and income generated by the entity should not be assigned to, or distributed among the owner(s) or their associates. Penalty for late filing of tax returns are. The net amount due to the School is US$1,700. The income accruing to or derived by a charitable organisation is exempt from tax . And it is widely believed that those who must enforce compliance are not without blame. In Ghana, tax is deducted from an employees personal income at source through a pay-as-you-earn scheme. Men receive an average salary of 317,259 GHS. The first step in paying your business' taxes online from the comfort of your home or office is to visit the Ghana.GOV website. Articles of incorporation from the country of origin (if it is an external company). The expenses in the Profit and Loss statement must be traced to the cash book, with supported payment receipts accordingly, The salaries and wages figure in the Profit and Loss tally with the PAYE filings. 2010 conferring a private benefit on any person other than a benefit that is in pursuit of a function for which the entity is established, Act 896 does not define public nature. Are we condoning contravention of Act 179? When the revenue exceeds the expenses of the NGO, it is then that such organization earns profit. National Disaster Management Organisation (NADMO) is situated in Accra, Ghana. Taxed at 30%. Charitable or Religious trusts are constituted to promote the welfare of public and hence, Income tax law provides exemptions to any income derived from property held under such trusts if it is not misused or diverted to non-charitable objects. Any excess revenue (surplus) remaining after all the expenditures of a religious organisation in any year has to be retained and applied in the future to the companys purposes. Mining firms thus appear to be more compliant with payroll deduction than other industries that operated in the economy in the nineties. In terms of donor funding, in the current world that we are in, every penny of the donor must be accounted for. The Ministry of Finance and Economic Planning together with the revenue collection agencies recently launched a special revenue mobilization exercise to improve and expedite action on overdue taxes. The survey sought to find out from the respondents about their profession, where they work, for whom they work, and whether taxes were deducted from their pay in the course of the survey period. There are increased calls from the public for regulation of the sector. It is actually the opposite. Privacy Policy Under Act 896, there are 3 key conditions that must be satisfied by a religious organisation to qualify for exemption from income tax. Notwithstanding the above, there are avenues or vehicles through which religious organisations can engage in profit-making activities without contravening any law. WHAT HAPPENS TO THE PROFIT EARNED BY THE NGO? 2. But this is a general mis-conception that we tend to have because of the truth of it being a non-profit organisation. Purchase of anniversary T-Shirts and Clothes; US$1,000, c. Rental of the premises of a near-by School which has bigger space for reception after the programme; US$2,000, d. Catering - caterer to provide food and drinks for the programme; US$1,000; and. More likely, it is their employers that may be at fault. File Annual Returns at Fifty Ghanaian Cedi (GHS 50) together with Audited Account. NGO staff receive a salary for the work they do. NGOs can accept donations from private individuals, for-profit companies, charitable foundations, and governments, whether local, state, federal, or even foreign. If you are an established business operating in Ghana, one of your key obligations is to pay your taxes. In reality, this understanding may not be true in all the cases. Brochure or publication about your organization. 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. Individual Donors for Education 2023/2024; 3000+ Grants, Donors and Foundations Providing Support and Individual Support for Education. Consumer and industrial products and services. On the flip side, the receipts of . poor girls are given the chance to attend University. The CG is appointed by the President in compliance with section 13(1) of the Ghana Revenue Authority Act, 2009, Act 791. After 14 years following the passage of the Income Tax Ordinance, then came the Income Tax Decree, 1975, S.M.C.D 5. Application letter on the organizations official letterhead, Memorandum of understanding between the NGO and the Government. b. A number of goods and services are exempt from VAT under the VAT Act, 2013 (Act 870) law (S. 15 Section 35/ Schedule 1). The implication of the above definition was that, for any religious organisation to qualify for exemption, it should not only be described on paper as such, it must also act pari passu. The exercise led to the shutdown of a number of tax delinquent companies. So if anybody is sitting somewhere thinking that you can pocket an NGOs money, spend it and marry more wives, try it, she cautioned. Third, there is a fundamental issue of whether we are sharing the tax burden fairly? Section 10(1) of Act 179 provides that a Company Limited by Guarantee shall not be incorporated with the object of carrying on business for the purpose of making profits. However, the value of the transaction is less GHS2,000 (approx.. US$420). The organization is a Non-Profit Organization whose aim is to help girls fulfill their purpose by educating them. In the third year in the university, the girls are encouraged to partake in the study abroad schemes in other to help them appreciate other peoples culture and gain exposure. As was said by Ms Sophia Akuffo, JSC (as she then was), in the case of Atta Barfour v Tema Development Corporation, it is a basic principle that equity aids the vigilant and not the indolent. Therefore, where the Ghana Revenue Authority continues to sit and watch, and fail to enforce the law, it cannot put blame on the religious fraternity. Copyright 2016, All Rights Reserved. Thanks. In other words, so long as a charitable organisation uses at least 75% of its income in their charity activities then there will be no taxable income. This is the background to the general expectation that NGOs should not be subject to taxation. Who procured it and for what? At a glance, it may appear a lot of our religious organisations whose activities fall within the above-mentioned conditions for VAT registration may not have registered with the Ghana Revenue Authority. For domestic transactions, examples include, works (5%); goods (3%); services (7.5%); etc. Tax Calculator: If you are a contractor and want a calculation on your tax and net retention in Ghana, we can supply it to you free of charge. LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. Pay as You Earn (PAYE): The law exempts NGOs as an entity from paying taxes on non-profit related income as explained above. 4. iv. Uganda's Income Tax Act provides that an organization is exempt from paying income tax if it falls within the definition of "exempt organization" under Section 2 (bb) of the Income Tax Act and has been issued a formal . 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. 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