Salary, allowances, facilities, pension and gratuity of the President; Income directly connected to the Government or local authorities activities; Income of a non-commercial public corporation; Gain from life insurance when the proceeds are paid by a resident insurer; The income of a non-resident person from a business that operates ships or aircraft, if the Commissioner-General is satisfied that an equivalent exemption is granted by that persons country of residence to persons resident in Ghana; A dividend paid to a resident company by another resident company when the company receiving the dividend controls at least 25% of the voting power in the company paying the dividend. Firstly, whilst it is true that in certain cases NGOs will have relief from income tax on the NGO entity itself, and from certain indirect taxes, any such relief is normally subject to conditions. An NGO is an exempt organization under the Act. Includes transportation by bus and similar vehicles, train, boat and air. 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. Youthful Life Improvement Organisation is situated in Tamale, Ghana. The income accruing to or derived by a charitable organisation is exempt from tax . From the foregoing, the objects of a religious organisation may include, but not limited to provision of services to, or conferring of benefits on an identifiable community or body or a section thereof with equal access to all intended beneficiaries without any particular individual(s) being the ultimate beneficiary(ies). The organization is working in Associations business activities. It is believed that for the same gross income, cocoa farmers and other exporters, for example, pay more in direct taxes than private transport owners, building contractors, lawyers and consultants because of how export taxes are levied and collected. A relief is an allowance given to a resident individual to reduce his or her tax burden. 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These . NGO staff receive a salary for the work they do. That said, for tax purposes, the taxman may be unconcerned with how the income is generated. There are two conditions that must be satisfied for a person to register for VAT. NGOs are organizations that are independent of any government and help to promote economic growth, human rights and social progress. Do NGOs pay tax in Ghana? This exemption excludes professional services such as architectural or surveying (i.e. 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. 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. If you enter only ghana.gov in your browser, you won't find the website. 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. In Ghana, tax is deducted from an employee's personal income at source through a 'pay-as-you-earn' scheme. 2. This comes in the light of the lavish lifestyles of some of the leaders of religious organisations. Therefore, the applicable withholding tax rate is 3%. These exemptions are to be outlined during filing. With reference to the holding of the Chapel Hill School Limited (Supra) case, and considering the present state of all applicable laws, the income of a religious organisation established as a Company Limited by Guarantee or a Trust (with no individuals ultimately being the beneficiaries) in the performance of its objects, the business profit is not subject to tax in Ghana. they have been specified in the law, or in any other case, the procedure to enforce such exemption has been followed). b. 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. poor girls are given the chance to attend University. A resident of India having a taxable income and a non-resident having an Indian passport can claim for benefits if they have made a donation to an NGO which is registered with the Income Tax Department and holds tax exemption status u/s. Therefore, the vehicle of operation should not be by a company with shares. To this end, the following sectors deserve the attention of the Internal Revenue Service (IRS): manufacturing (small and medium size firms), the hospitality enterprises, construction and transportation sectors, and professional service providers. These organizations do not exist for profit motive, hence called as . Perhaps the area that can cause the most confusion is in relation to agreements entered into with Government entities, which frequently will include some commitments from the Government in relation to fiscal matters. However, NGOs make efforts to pay fair wages to their workers. Taxes in Ghana at a glance, but obsolete. Company is working in Associations business activities. Roger Federer. It should be noted that in a situation where the assets are in the name of the church but are being used for the personal benefit of the pastor, the collateral benefit or benefit in kind should be assessed to tax in the hands of the pastor as required by law. The economic slowdown had a considerable impact on households. Disclaimer of Warranty, About Us 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. (NGO Act Section 46 (1)). 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. The World Bank grouped NGOs into two. Whether you're a contractor or a permanent employee, you have to pay tax on all of your earnings whilst you're in the country. Do non-profit/ non-governmental organisations (NGOs) deserve a special tax regime? : DSD/6634. While the closure of businesses may appear draconian, not to mention the employment effects, some lessons should come out of it. Application letter on the organizations official letterhead, Memorandum of understanding between the NGO and the Government. In practice, therefore there is the need for NGOs to ensure the office of the Minister for Finance is also involved in the process of negotiating contracts with the other relevant Ministry, so that the exemptions concluded can be gazetted. . Condition of Use Save my name, email, and website in this browser for the next time I comment. Non-Governmental Organizations (NGOs) play a vital role in the process of social and economic development of the economy. The Registrar of Companies appears not to be enforcing the law. Advertisement. Accordingly whoever is found guilty under the Act, shall be punishable with an imprisonment for a term that shall not be less than three years but may extend to seven years and fine which may extend upto five lakh rupees. After the investigation, the facts will speak for themselves. But the big deal here is that you still have to pay them. Overseas Shipper Tax. STEP 4- Company limited by guarantee regulations form. Incidentally, even if there is no taxable income this does not negate the requirement to file an income tax return. The employer is required to withhold the employees taxes and pay to the Ghana Revenue Authority. They are also non-profit organizations. 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. - 2023 PwC. 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). As well as paying tax in Namibia, you might also still be eligible to pay some . Petrol, diesel, liquefied petroleum gas, kerosene and residual fuel oil. Changes after Registration of Company Limited by Guarantee. NGO Audit. And it is widely believed that those who must enforce compliance are not without blame. gifts from church members in the United Kingdom, etc. This definition limited tax exemption to the Christian Church with regards to their income other than derived from business. Similarly, Act 179, requires all Companies and Trusts to file their annual accounts (returns) with the Registrar of Companies. Christian Relief Organisation is situated in Nsawam, Ghana. The church is required to withhold tax of US$250 on payments to the supplier and pay same to the Ghana Revenue Authority. The country director shared that working in an NGO comes with a lot of accountability and audits. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. these are taxable services). Section 97(4) of Act 896 provides that income accruing to or derived by a charitable organisation is exempt from tax. Section 97(5) provides that Section 97(4) does not apply to business income of the charitable organisation [Emphasis mine]. With the above set of facts, it is clear that the total of the monies used to buy the vehicles, house and shares exceeds the pastors employment income. In many countries, NGOs are exempt from paying state and federal taxes. In Chapel Hill School Limited v the Attorney-General and the Commissioner, Internal Revenue Service, [2009, Unreported] Dr. Date-Bah JSC (as he then was), said Our comment on this argument by the Second Respondent (Commissioner, Internal Revenue Service) would be that the mere fact that what the Appellant does constitutes a business does not inevitably lead to the conclusion that the activity cannot be exempt from tax. Therefore, a religious organisation registered as such with the Registrar of Companies is separate from the founder(s), religious leaders, or employees of the company. E Plaza 2 Building, Accra, Ghana, P.O.BOX AN 16859, Accra North Ghana, Accra. Ordinary meaning can, therefore, be given to the stream of income attributable to religious organisations that are exempt from tax. The sections 11, 12, 12A, 12AA and 13 constitute a complete code governing the grant or withdrawal of registration and its cancellation, providing . Therefore, the amount due the service provider is US$300. It is, therefore, important for us as a country to know the position of the law and chart a way forward in creating an all-inclusive society that promotes fairness in honouring our tax obligations. The NGO also functions in some areas of West Africa as follows: Benin, Burkina Faso, Liberia, Nigeria, and Sierra Leone. First, in some cases, it is apparent that although personal income taxes are deducted at source, some employers may not remit the taxes to the state accurately and promptly; aided perhaps by corrupt tax officials. Procedures for registering a company limited by guarantee (Not-for-profit / NGO). Brochure or publication about your organization. The Income Tax Act, Chapter 340, Section 2(f) provides guidance on the types of economic activities that exempt organizations may engage in without becoming liable for . The salary in NGOs are totally depends on NGOs income and investments. WELL NOTED. b. Sympathy International is owned and managed by a Ghanaian-owned Non- Governmental Organization (N.G.O). After you are registered as an NGO, you can apply for tax exemption through your country's revenue agency. 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. Are we condoning contravention of Act 179? In the case of Mould v. De Vine, Jiagge S. (as she then was) wrote, There was no alternative remedy available to the applicant. A number of goods and services are exempt from VAT under the VAT Act, 2013 (Act 870) law (S. 15 Section 35/ Schedule 1). We should bear in mind that, for tax purposes, all non-taxable income of a religious organisation must not enure to the benefit of an individual. 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. After all taxes are compulsory payments and the individual measure of gains cannot be a sensible rule to go by in deciding whether or not to comply with the law. But their major areas of operations include research, policy analysis, community development, environmental protection, advocacy, training, and development. Should you have any comments, you may send it by email, kwasi.nyantakyi.owiredu@gmail.com. All businesses registering with the GRA, must do so at the nearest GRA district office closest to the project location. 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