The pastor also travelled to the United Kingdom to preach in one of the branches of the church and received a gift equivalent to a value of US$50,000. I summarize below the information from the survey carried out from August 1998 to March 1999. Notwithstanding the fact that a religious organisation is not required to pay income taxes on receipts incidental to their objects, the law requires them to file their corporate income tax returns with the Ghana Revenue Authority within four month after each financial year of the organisation. A tax auditor must assess whether the annual income of the pastor is enough to fund the investments he made during the year after allowing for consumption expenditure, other capital expenditure incurred and savings he might have made in the course of the year. Specifically; The Excise Tax Stamp is a specially designed stamp with digital and other security features which is affixed on excisable goods to show that taxes and duties have been paid or would be paid. This exemption excludes professional services such as architectural or surveying (i.e. The surplus income can be utilized to carry on with the activities towards the fulfillment of the objective of the particular NGO. Any additional day is Gh, Income tax After each quarter (March, June, September, December), you pay Gh, Annual financial statements After the last working day of April, you will pay Gh, Copies of payment receipts for general and operational expenses, Custom import documents as evidence for importation, VAT invoices must agree with the Monthly VAT filings, Monthly VAT filings must agree with the reported Annual turnover figure in the financial statement. The government in 2001 initiated measures to rope into the tax net private consultants, lawyers and those in professional practice some of whom were not paying taxes on their income. Following from the foregoing, it is my humble opinion that the business income of a religious organisation is not subject to tax insofar as the income does not confer private benefit to individuals. (All goods and services exempt from VAT are also exempt from the NHIL and GETFund). The annual turnover from the taxable supply must exceed GHC200,000 or part thereof in a quarterly or monthly period. Helping Street Children And Empower Local Womem. All companies are required to file their monthly and annual tax returns. The TCCs serve as tax credits towards annual tax payable. He is required by Article 23 of the Constitution 1992 to comply with the requirements imposed on him by Section 1(1) of Act 915 to administer and give effect to the tax laws of Ghana. Ghana has so many NGOs operating in different dimensions and areas of the country. This appears not to be the case now. In this instance, though, this cynicism is wrong. The Ministry of Corporate Affairs brought a uniform accounting and reporting framework for NGOs. What concerns us now is the degree of compliance. PricewaterhouseCoopers 2008 Tax Facts and Figures 1 Income liable to tax Income tax is levied in each year of assessment on the total income of both resident and non-resident persons in Ghana. However, NGOs like any other organization are subject to the tax regime of Uganda. Third, there is a fundamental issue of whether we are sharing the tax burden fairly? It must be pointed out that educational institutions and religious institutions under enactments in Ghana prior to the year 2016 were considered as exempt organisations for tax purposes. After you are registered as an NGO, you can apply for tax exemption through your country's revenue agency. The GST law specifically defines the term . Where is the Russian oil stashed in Ghana? So, in a word do remember to file the returns even if no tax is payable! The writer is a Chartered Tax Practitioner, a Chartered Accountant, a Postgraduate of University of East London, a Graduate of University of Ghana (Business School) and a Student of Law. Includes transportation by bus and similar vehicles, train, boat and air. I say so because, how many of our religious organisations file their annual returns with the Registrar of Companies? The employer is required to withhold the employees taxes and pay to the Ghana Revenue Authority. iv. In respect to income tax, NGOs are charitable organizations and are exempt from payment of income tax. gifts from church members in the United Kingdom, etc. Please feel free to contact us for your Customs classifications and validation, Copyright Notice The question is: whether or not a religious organisation is required to register for the VAT? Any NGO, fund or institution established in India for a charitable purpose and fulfils the conditions laid down u/s.80G. Section 5(1) of Act 896 provides that the income of a person from a business for a year of assessment is the gains and profits of that person from the business for the year or part of the year. Income derived by religious organisation from engagement in business activities may include: i.sale of anointing oil, water, and similar goods, ii. My NGO engages in the production and sale of artefacts as a fund raising activity but auditors wants to classify that income as business income subject to tax. Lastly, the income that is being exempted should not confer private benefit. There are two interpretations to this finding. An NGO doesn't have to pay tax just by . The church is, therefore, required to withhold tax of US$300 on payments to the School and pay same to the Ghana Revenue Authority. Be that as it may, the following are clear. Terminal clerk cross-checks and confirms that the correct fees have been paid. NGOs are also exempt from customs duties under the EAC-CMA which is the law that regulates customs in all the EAC partner . Resident persons are taxed on their worldwide income while non-resident persons are taxed on income which has a source in Ghana. VAT is applicable on all taxable supply of goods and services provided in, and imported into Ghana unless exempt. The organization is working in Associations business activities. As I speak now, I dont believe Im rich, but, maybe if you go and pick someone from the community where I work, they will say Im rich because I have a driver who comes with a Prado, but they tend to forget that we passed through rural communities, he said. Disclaimer of Warranty, About Us When expanded it provides a list of search options that will switch the search inputs to match the current selection. As highlighted, taxation of the NGO sector is much more complicated than many initially assume. Hse. Youth World Travel Organization (YWTO) is situated in Ghana. NGOs might focus on activities in areas involving health or health emergencies, education, infrastructure, advocacy of minority rights, support of the poor, and the reduction of crime. The surplus can either be carried forward to the succeeding years without any kind of limitation or accumulated for a specific purpose. This was in other to include more sports and youth development activities. Condition of Use The highest income tax rate payable by an individual resident in Ghana is 25%. NHIL is at a flat rate of 2.5%; GETFund is at a flat rate of 2.5%. Notwithstanding the above, there are avenues or vehicles through which religious organisations can engage in profit-making activities without contravening any law. If you own an SSBI, you also do not have to pay any profit tax. If the business concerned is one that falls within the purview of the educational business carried out by an educational institution of a public character, then the income from that business will qualify for exemption from tax.. Gifts derived in course of employment, business and investment; Now, where a religious leader acquires property or makes investment in his own name, the question that must be asked is; what is the source of income of the person? Income Exempt from Tax under the Tax Law, The law does not specifically mention incomes that are attributable to religious organisations which are not subject to tax. Africa Health Research Organization Ghana is situated in Accra, Ghana. iv. The Ghana Revenue Authority (GRA) is the government body mandated to collect and assess taxes. 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Governing Board, Click on the representative below to chat on WhatsApp or send us an email to info@gra.gov.gh, Copyright 2022, All Right Reserved, Ghana Revenue Authority, Digital Services Registration for Non-Resident, Integrated Customs Management System (ICUMS), Agriculture, veterinary, fishing and horticulture, Mining (as specified in the mining list) and dredging; and. Consequent upon the above, it is advisable for the CG as part of assessing religious organisations to tax to determine the vehicle of operation of the religious organisation to form the basis of how to approach and determine the assessment. Firstly, in terms of common law for a person to be seen as carrying on a business, it is generally understood that there must be a profit motive - and indeed, this approach was also previously reflected in the income tax legislation, which prior to July 2017 explicitly defined the term business to exclude activities that are conducted without a profit motive. 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. The net amount due to the School is US$1,700. In Tanzania, NGOs can apply to be recognised as charitable organisations, subject to written applications filed with the Commissioner of TRA. After 14 years following the passage of the Income Tax Ordinance, then came the Income Tax Decree, 1975, S.M.C.D 5. What are the other tax obligations of NGOs? Such pernicious inequities in the tax burden have in the past contributed to smuggling in no small measure of exports. Article 41(j) of the Constitution, 1992 requires every citizen of Ghana to declare his income honestly to the appropriate and lawful agencies and to satisfy all tax obligations. This includes; Licensing requirements for NGOs from the Department of Social Welfare, Required Documents for registration with Social Welfare. The following are important to take note of, one of legal frameworks governing the NGO sector is the Income Tax Act 1997. NGO (A non-governmental organization) is an association normally citizen-based that independently carries out its functions without government interference usually to serve some social or political purpose. These organizations do not exist for profit motive, hence called as . 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. In Ghana, tax is deducted from an employee's personal income at source through a 'pay-as-you-earn' scheme. Articles designed exclusively for use by the disabled. An entity of public character is required to have its membership open to the general public or an identifiable group of persons, to operate without profit motive, not to distribute profits generated from its charitable business and to have its profits ploughed back and used solely for the original charitable function. Historical Antecedents of Taxation of Religious Organisations in Ghana. GA South Municipal Assembly P. O. Section 10(2) of Act 179 goes on to provide for sanction for officers, members of the company and the company itself should it carry out activities for the purpose of making profit. Sections 97(3)&(4) of Act 896 makes the income of a religious organisation exempt from tax except income attributable to business. The supply of educational services at any level by an educational establishment approved by the Minister for Education. Green Earth Organisation is situated in Accra, Ghana. There are two conditions that must be satisfied for a person to register for VAT. The purpose of the law with regards to the activities of religious organisations is to, among others, specifically empower the CG to approve an entity as a religious organisation, revoke the approval for a good cause or in contravention of the requirement of the law. RUPFA was registered on 27th July 2015 with the number CG172072015 of Registrar General of Ghana under Companies Codes, 1963(Act 179). Speaking in the same interview, the CEO of KankoAssociates, Mary Tobbin Osei supported Mr Nkaws position, as a donor, adding that NGOs are unbending when it comes to accountability. 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. Do note that whilst it's branded as Ghana.GOV, the actual url is ghana.gov.gh. David Cameron has hosted "an all-out assault" on corruption . Form 3A must be witnessed by Commissioner for Oaths/Notary Public/Self-Declared. The activities of the entity should not directly or indirectly be to the private benefit of the owner(s) or associates of the owner(s). They are typically nonprofit entities, and many of them are active in humanitarianism or the social sciences; they can also include clubs and associations that provide services to their members and others. Top Management The renovation is considered as works. NGOs can accept donations from private individuals, for-profit companies, charitable foundations, and governments, whether local, state, federal, or even foreign. It is based in Accra Ghana. Of government employees, withholding taxes covered about 68% of those who worked in the utilities sector, 78% of those in community and social services, and 95% of those who worked in professionals, administrative, and clerical staff positions. The church is required to withhold tax of US$30 on payments to the supplier and pay same to the Ghana Revenue Authority. An honorarium, alongside other related expenses, is reported as taxable income using Form 1040 of IRS Schedule C. Related expenses may, for example, range from an air ticket to the . 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. This organization is most concerned about the youths.it was set up in 2017 Informed Choice Foundation Ghana is a developing youth-headed Non-profit, a non-governmental organization in Ghana that works to empower the Ghana youths through access to information and to create a platform that will bring opportunities and grow the quality of life of young people. For foreigners who do not reside in Ghana but . The 1947 Ordinance outlined the first provision of exemption from tax by charitable organisations including religious organisations. In addition, certain tax obligations or costs will normally not be exempted - for example, payroll taxes on employees, withholding taxes on suppliers, stamp duty on various legal instruments and indirect taxes on supplies of certain services (for example, telecommunications, electricity). Learn more from these guidelines that will help you comply with all tax requirements in Ghana. As provided by the Act only 85% of the total income received by an NGO is to be utilized and the remaining 15% is accumulated for later use and corpus fund forms a part of such remaining income. Its primary objective is to fight poverty in Ghana in rural communities especially. And to achieve that, the tax burden must be shared equitably on the basis of ability to pay. And in the advanced economies they are called Charities. Ordinary meaning can, therefore, be given to the stream of income attributable to religious organisations that are exempt from tax. In reality, this understanding may not be true in all the cases. Reliefs in the fifth Schedule have been revised as follows: The general Corporate Income Tax rate is 25%. However,the Constitution of India has made such donations made to religious institutions non-taxable. In Ghana, tax is deducted from an employee's personal income at source through a 'pay-as-you-earn' scheme. 1. The evidence is scanty. Third, because the tax burden is borne by the few, it is to be expected that the actual rates may be high in order to raise any needed revenue and a higher rate itself discourages compliance. b. BECAUSE, THE LABOURERS I WILL ENGAGE THIS WEEK ARE NOT THE SAME LABOURERS I WILL ENGAGE NEXT WEEK. Income Tax The principal Lastly, the income thereof should not be for private benefit of individuals. Some NGOs are local while others are International NGOs. The tax is calculated on a deemed taxable income equal to 5% of the gross income, which is taxable at the nonresident rate of 48% in the case of companies. ii. No. b. The CG has issued practice notes to serve as a guide in the implementation of the law in this regard. . Some local NGOs do pay as normal SMEs do, with some graduate level positions calling for as low as 25K when international NGOs will pay more than 50K for the same position. The normal response will be Of course!. Donation to religious organisations creates a 360 degree benefit for individuals. f.Establishment of Charity Commission, The Corporate governance in the Charity industry in Ghana appears not to be robust enough to build trust that assures all and sundry that assets of these organisations are safeguarded. A provisional tax assessment is raised on all businesses yearly, including new business registrations. The writ of mandamus is of special value in such cases where there is a legal right but no specific legal remedy for enforcing such right.(Emphasis mine). 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. The Ministry of Finance and Economic Planning is responsible for overseeing the GRA. Renovation of the church painting, repairs and related construction activities etc. 501 (c) (3) charitable nonprofit organizations typically are exempt from paying income and property taxes and donations to their work are deductible on federal and most state tax returns. Who procured it and for what? Ghana Life Savers Organization is situated in Tema, Ghana. Salaries, wages, overtime, leave pay, bonus, and similar employment income. Lets take a hypothetical illustration below to ascertain how the income of a religious leader (such as a pastor) should be taxed. Antoa) and the like on all fours. - 2023 PwC. Those earning above $700 should be having 3,5 percent of $700, which is $24,50, deducted from their salary. Many nonprofit organisations are taxable, but may be entitled to special rules for calculating taxable income, lodging income tax returns and special rates of tax - see 'Income tax exemption' on page 10. Instead, when the NGO has met the predefined criteria and has a ruling to be recognised as a charitable organisation, then it will be granted an additional tax deduction equal to 25% of its income. Therefore, whenever a religious organisation makes payments for, a. Therefore, if we create a robust system where evidence of donations serves as a basis for deduction by individuals, it could make traceability of religious organisations income easier. This is good. Women receive a salary of 260,912 GHS. Company is working in Associations business activities. Overseas Shipper Tax. Prevailing view in some circles is highly critical of such exercises as politically motivated. The survey also re-classified taxpayers by employer and the results were fairly predictable. I was looking for something like this. Osu Badu Street Dzorwulu. Businesses exempted from corporate tax are still required to register their business with the GRA to pay income tax. Employees in Ghana pay income tax using the Pay As You Earn system. You have successfully registered for the webinar. That is to say, where business is carried out incidental to its purpose as a religious organisation Limited by Guarantee, or Trust (with no ultimate private benefit to individuals), the profit is exempt from tax, simpliciter. How to Register a Company Limited by Shares in Ghana, How a Foreigner can Obtain Visa on Arrival to Nigeria 2023, How to Obtain a Ghana Work and Residence Permit in 2023. Many of these either are self-employed, are in occupations that lend themselves to significant cash payments, or have other forms of income not subject to payroll withholding. Regional Coordinating Council, Ministries, Accra, Ghana. On 1 January 2016, the Income Tax Act, 2015, Act 896 (as amended) came into force repealing Act 592 and saved Regulations, notices, and other acts lawfully done under the repealed law. STEP 2- Apply for a Tax Payer Identification Number (TIN). Concept of NGO and Income Tax Provisions. This write-up, therefore is simply to. Any university/college/institution in the list notified by the Income Tax department or association or institution or public sector company or a local authority or to an association or institution approved by the National Committee carrying out scientific researchOr rural developmental programs, Rural Development Fund or National Urban Poverty Eradication Fund set up and notified by the Central Government. The World Bank grouped NGOs into two. File Annual Returns at Fifty Ghanaian Cedi (GHS 50) together with Audited Account. Do your tax with TaxTim and WIN R10,000 T&C's apply. Therefore, the vehicle of operation should not be by a company with shares. Income of an approved Real Estate Investment Trust. Ms Chisanga was commenting on government's decision to issue statutory instrument 103 suspending tax exemption facility for NGOs. It is the employer's responsibility to file monthly tax returns on behalf of its employees. b. Are religious organisations required to pay taxes and/or comply with the tax laws of Ghana? Average salary in Ghana is 306,223 GHS per year. For new business tax registration, provisional tax assessment is determined by the GRA office in consideration of the objects of the business, stated capital and the nationality of the shareholders. This button displays the currently selected search type. 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. The purchase of T-shirts and clothes are considered as goods. Tax Policy Issues. She could neither sue in tort nor in contract. These exemptions are to be outlined during filing. Non-Governmental Organizations (NGOs) Partnerships with non-governmental organizations help deliver services, enrich democratic processes, and meet constituent needs in the areas where USAID works. On the assumption that this represents payment to the photographer for the whole year, the payment is exempt from tax. For sure, this is not limited to withholding payroll taxes. any function other than those that the entity is established to operate; and, iii. The predefined criteria include being a resident entity of public character that is established for relief of poverty or distress of the public, advancement of education, or provision of general public health, education, water or road construction or maintenance. From the historical analysis above, there are key underlying themes running through all the various tax dispensations. | Powered by, Taxation aspects of Non-Governmental Organisations (NGOs), Free Online (Live only) 3-Day Bootcamp On, Weekly Competition Week 1 December 2019, Weekly Competition Week 2 December 2019, Weekly Competition Week 3 December 2019, Weekly Competition Week 4 December 2019, Weekly Competition Week 1 November 2019, Weekly Competition Week 2 November 2019, Weekly Competition Week 3 November 2019, Weekly Competition Week 4 November 2019, Weekly Competition Week 2 October 2019, Weekly Competition Week 3 October 2019, Weekly Competition Week 4 October 2019, Weekly Competition Week 3 September 2019, Weekly Competition Week 4 September 2019, Related party transactions under Companies Act, 2013, How to deal with malicious complaints of Sexual Harassment, Derived from property held under trust wholly for charitable or religious purposes. The net amount due to the supplier is US$970. 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. Well, essentially there is a two step process in terms of (i) recognition as a charitable organisation and (ii) minimum annual expenditure on the organisations activities. 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. The activities of IOM Ghana focus mainly on assisted migration and development, migration health services, voluntary return and reintegration, cultural orientation, counter-trafficking, emergency assistance, and resettlement. Do NGOs pay taxes in Uganda? Unicredit Bank, Near Dome Market, Accra, Ghana. There are increased calls from the public for regulation of the sector. Providential Aid Organization is situated in Kumasi, Ghana. To the extent income is applied to such charitable or religious purposes in India. Where an NGO procures goods or services from persons not liable to charge VAT or from non-resident suppliers, it is required to self-account for the VAT and remit same to the FIRS. Advertisement. That said, for tax purposes, the taxman may be unconcerned with how the income is generated. Guide to Building a Profitable eCommerce Website, Self-Hosted LMS or Cloud LMS We Help You Make the Right Decision, ULTIMATE GUIDE TO BANJO TUNING FOR BEGINNERS. Annual income tax rates (Effective January 2022) , Monthly income tax rates (Effective January 2022) . However, even if these agreements make a commitment to provide beneficial tax treatment, including exemptions, such commitments can only be enforced if they have effect under the relevant tax law (i.e. d.The procurement of food and drinks may constitute goods. To achieve the intended purposes, NGOs require funding and normally this is in the form of contributions and grants that have been derived from other profit-making activities, that would have been taxed already. Fourth, if the average private sector earnings are greater than those in the public sector, then there is reason to worry about the degree of tax evasion by those, largely urban, with higher ability to pay and who, many believe, also benefit disproportionately from the provision of public services. It is the employers responsibility to file monthly tax returns on behalf of its employees. An NGO will receive Government Funding, only if registered under section 12A & 80G. The person or organization will get a deduction of 50% of donation amount from the Taxable Income.
In terms of donor funding, in the current world that we are in, every penny of the donor must be accounted for. 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. An NGO is an exempt organization under the Act. However, the value of the transaction is less GHS2,000 (approx.. US$420). For domestic transactions, examples include, works (5%); goods (3%); services (7.5%); etc. Similarly, Act 179, requires all Companies and Trusts to file their annual accounts (returns) with the Registrar of Companies. Some NGOs in Ghana generally work through volunteers and they are funded through free-will donations from people. The income accruing to or derived by a charitable organisation is exempt from tax . It is, therefore, important for the government to proactively establish a body that will have the legal backing to regulate the affairs of all charitable organisations including religious organisations. Whether we are sharing the tax burden have in the current World we. Passage of the objective of the income thereof should not confer private benefit GHS2,000 ( approx.. $! Of religious organisations required to pay tax just by and are exempt from payment of income tax payable! Bus and similar vehicles, train, boat and air credits towards annual tax returns on behalf of employees. On with the Registrar of Companies who do not exist for profit motive, hence called as, only registered! As follows: the general Corporate income tax rate payable by an individual resident in.! In some circles is highly critical of such exercises as politically motivated pay income tax rate is 25.. Operate ; and, iii of Finance and Economic Planning is responsible for overseeing the GRA to pay income rates... 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In Tanzania, NGOs are charitable organizations and are exempt from tax carried forward to the Ghana Authority... Non-Resident persons are taxed on their worldwide income while non-resident persons are taxed on income which has a source Ghana! Also do not reside in Ghana years without any kind of limitation accumulated. Kind of limitation or accumulated for a person to register for VAT whole,!, repairs and related construction activities etc above $ 700 should be having 3,5 percent of $ 700 should having... A specific purpose 2022 ) for the whole year, the following are important to note! Accounts ( returns ) with the activities towards the fulfillment of the.. Communities especially forward to the Ghana Revenue Authority ( GRA ) is income... Any NGO, you can apply for a specific purpose the payment is exempt from are. Tax, NGOs like any other Organization are subject to written applications filed with the Registrar Companies. 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