Ghana has a strong and vibrant labour movement that is very effective in articulating the demands of its workers. The various sectors of the economy are represented by sector labour unions that are affiliated to the national umbrella labour union called the Trades Union Congress (TUC). The main sector of employment is agriculture, which provides employment for more than half the workforce in Ghana.
Foreign companies operating in Ghana may find it challenging to deal with the complexities of the country’s tax system. The primary concerns for a foreign company that needs to comply with tax laws in Ghana are: Individual income tax (IIT) for employees in Ghana, social security costs, VAT, withholding tax, business tax and permanent establishment concerns.
Foreign nationals wishing to work in Ghana are required to obtain a work permit. Foreign companies registered with the Ghana Investment Promotion Centre (GIPC) are automatically granted an Automatic Immigration Quota (AIQ), which enables them to hire foreign nationals. However, the number of foreign nationals that may be hired is dependent on the amount of foreign equity capital invested.
There are three types of business forms available to foreign companies in Ghana. Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements. In most cases it will depend on the degree of commitment a company has to Ghana and the planned business activity.
When setting up a company in Ghana, you have the following options:-
This article provides a general guideline for foreign businesses on entering Ghana for business purposes. In particular, it looks at common pathways to establishing a business presence in Ghana, generally through a corporation or branch office. In addition, various economic, tax and regulatory factors are provided throughout as a source of useful information to assist those who will enter the Ghanaian economy. The guide also looks at some immigration requirements such as obtaining appropriate visa status.
Data is based on the time of writing, November 2015 or closest available dates.
GEO Solutions or DIY Employment
Companies entering Ghana must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a GEO solution to handle payroll and employment responsibilities. A GEO or Ghana Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Ghanaian entity established that can run payroll.
A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.
|Management Fee for Employer of Record Services / Monthly Payroll Costs||
Please contact us for a quote
Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.
|Tax Returns Supplied||
|Corporate Tax Requirements||
The Ghanaian tax year is the calendar year. Companies must submit their tax returns within four months from the end of the accounting year.
Tax instalment payments are due by the last day of every quarter (i.e. three- month period) following the accounting year-end of the company.
|Employers Social Security and statutory contributions||
Employers are required to contribute 13% of the employee’s gross monthly remuneration. For more details, please refer to the section on Employment.
|Employees Social Security and statutory contributions||
Employees are required to contribute 5.5% of the employee’s gross monthly remuneration. For more details, please refer to the section on Employment.
|Corporate Income Tax Rate||
The current corporate income tax rate is 25%. For companies operating in the upstream oil and gas industry, the general corporate income tax rate is 35%.
VAT is imposed on the supply of taxable goods and services as well as imports in Ghana. Taxable persons charge VAT on their taxable supplies (output tax) and are charged with VAT on goods which they receive (input tax).
The current standard rate of VAT imposed on taxable goods and services is 15%, with reduced rates available for certain items (0%). In addition, a National Health Insurance Levy of 2.5% is imposed on the supply of goods and services in Ghana and the importation of goods and supply of imported services, bringing the effective VAT rate to 17%.
All persons engaged in taxable activities, with annual taxable supplies exceeding (or expected to exceed) GHC 120,000 are required to register for VAT.
Ghana imposes withholding taxes (WHT) on payments made to both resident (R) and non-residents (NR) on certain classes of income earned:
A reduced rate may be available under an applicable Double Tax Treaty.