Republic of Ghana

Ghana’s income tax structure is based on a progressive system that applies different tax rates to different income brackets for resident individuals, while non-residents are taxed at a flat rate. The system is designed to ensure fairness by taxing higher income levels at higher rates. Resident individuals are taxed on their worldwide income, while non-residents are taxed only on income derived from Ghana. The current personal income tax system applies graduated rates ranging from 0% to 35%, with the first portion of income (up to GHS 5,880 annually) exempt from tax. Non-resident individuals are generally subject to tax at a flat rate of 25% on Ghana-sourced employment income. Employers withhold tax from salaries through the Pay As you Earn (PAYE) system, while self-employed individuals file annual returns. Taxpayers benefit from personal reliefs and allowable deductions, such as contributions to approved pension schemes, which reduce taxable income. The Ghana Revenue Authority (GRA) administers and oversees tax collection under the Income Tax Act, 2015 (Act 896), as amended, including the Income Tax (Amendment) (No. 2) Act of 2023 (Act 1111), which introduced revisions to tax bands and related provisions.

Payroll taxes consist primarily of mandatory social security contributions and PAYE income tax. Employers are responsible for deducting and remitting these amounts to the relevant authorities. Ghana operates a three-tier pension system under the National Pensions Act, 2008 (Act 766). Tier 1, administered by the Social Security and National Insurance Trust (SSNIT), is the mandatory basic national social security scheme. Tier 2 is also mandatory but is managed by privately licensed trustees. Accordingly, statutory contributions apply to both Tier 1 and Tier 2. The total mandatory contribution for Tier 1 and 2 is 18.5% of the employee’s basic salary, comprising a 13% employer contribution and a 5.5% employee contribution. Of the total contribution, 13.5% is allocated to Tier 1, while 5% is allocated to Tier 2. Additionally, employees and employers may make voluntary contributions to Tier 3 pension schemes, which provide additional retirement savings and may offer tax advantages. Employers in Ghana are also responsible for complying with workers’ compensation obligations under the Workmen’s Compensation Law, 1987 (PNDCL 187). Although there is no mandatory occupational injury insurance scheme, many employers obtain private coverage to meet these obligations.

The Ghanaian tax year aligns with the calendar year, running from 1 January to 31 December. Payroll tax reporting and payment deadlines are strictly regulated. Employers must file monthly PAYE returns and remit income tax deductions to the GRA by the 15th day of the month following the month in which the income was earned. SSNIT contributions from both employers and employees must also be paid monthly by the 14th day of the following month. Contribution reports must be submitted by the end of the month, regardless of whether contributions are remitted to the SSNIT. Employers must submit an employer’s annual tax deduction schedule to the GRA by 30 April each year. This schedule details the total remuneration paid and PAYE tax withheld for each employee during the preceding year.

Under the Revenue Administration Act, 2016 (Act 915), all taxable persons and employers must maintain accurate and up-to-date records of employee details, payroll transactions, tax deductions, social security contributions and related documentation for at least six years. Compliance obligations include the timely filing of tax returns, accurate withholding and remittance of PAYE and social security contributions, and adherence to reporting deadlines. Failure to comply with these requirements can result in penalties, including fines, interest on late payments and possible legal action by the GRA or the SSNIT.