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.
A remote payroll in Ghana is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Ghana. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in Ghana is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.
In some cases, a company will register their business in Ghana under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Larger companies with a commitment to Ghana may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete the incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Ghanaian payroll and can fulfil all tax, withholding tax and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Ghanaian employment laws.
Companies can outsource the employment and payroll of their staff in Ghana to a GEO, like Shield GEO. This is possible for both foreign workers and Ghanaian nationals. This is the easiest, fastest and safest way to payroll staff in Ghana.
Shield GEO manages all aspects of payroll for workers in Ghana, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.
Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.
Read more about outsourced payroll and employment through Shield GEO.
Ghanaian cedi, GHS or GH¢
|Corporate Income Tax ?||
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%.
|Income Tax Rate ?||
|Payroll Tax ?||
|Sales Tax ?||
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.
|Withholding Tax ?||
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.
|Employee Social Security (EE SS)||
Employees are required to contribute 5.5% of the employee’s gross monthly remuneration. For more details, please refer to the section on Employment.
|Employer Social Security (ER SS)||
Employers are required to contribute 13% of the employee’s gross monthly remuneration. For more details, please refer to the section on Employment.