(All goods and services exempt from VAT are also exempt from the NHIL and GETFund). NGO Audit. Business Income of a Religious Organisation. . These originate either from the foreign offices of the developed countries or from the multilateral organizations set up by different countries such as the United Nations, the World Bank, the Asian Development Bank. Income tax in Ghana can range from 0 to 25 percent, and you need to be sure you are placed in the correct tax brackets. these are taxable services). 35AC of the Act if an NGO gets registered the central government approves of the scientific research programs/projects to be carried out by such organization. Learn more from these guidelines that will help you comply with all tax requirements in Ghana. By occupational classification, the highest compliance rate could be found among those who worked in administrative and managerial positions, professional and technical skills jobs, and those in clerical jobs. ii. WELL NOTED.
any function other than those that the entity is established to operate; and, iii. 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. Laboratory equipment for educational purposes and library equipment. Do non-profit/ non-governmental organisations (NGOs) deserve a special tax regime? The entity has a written constitution that prohibits that entity from, i.engaging in a party political activity, supporting a political party or using its platform to engage in party politics, ii. Unlike before, all companies limited by guarantee were excluded from Corporate Taxes and Value Added Tax (VAT). Accordingly, it is not surprising that it does create a fuss! The payment of the withheld tax and filing of the withholding tax return must be done by 15 September 2018. Condition of Use The answer is simple: insofar as a religious organisation satisfies the above 2 conditions, they must register and comply with the VAT Act, 2013, Act 870 (as amended) and its Related Regulations. Section 97(2) of Act 896 provides that the CG shall before approving an entity as a charitable organisation (including a religious organisation), ensure that, a. Scholarships for Study in Africa Scholarships for African Students Undergraduate Scholarships African Women Scholarships & Grants Developing Countries Scholarships . A relief is an allowance given to a resident individual to reduce his or her tax burden. . The Ministry of Finance and Economic Planning together with the revenue collection agencies recently launched a special revenue mobilization exercise to improve and expedite action on overdue taxes. Generally, NGO salaries are lower than in the private sector. the objective of the organization is to bring assistance to humanity by supporting the material, sports, education, and well-being of the poor physically challenged and the less privileged in Ghana. Nice Article. Corporate tax is the tax imposed on the net income of the company, in other words, it is a levy placed on the profit of a firm to raise taxes. LAASFUND was established in 2015. And this accumulated income can be used within the next five years and if not used then shall be considered as the income of the eleventh year. A deduction to the extent of 50% of the contribution can be made if so has been made to either of the following: b) The Prime Ministers Drought Relief Fund. Non-residents are liable to Ghanaian income tax on any income derived in Ghana from any trade, business, profession, or vocation, or which is derived from an employment exercised in Ghana. The Non Governmental Organisations Act which is the parent legislation on NGOs in Uganda is itself silent about taxation of NGOs. Country Director of Action Aid, John Nkaw, has dismissed the perception that people create non-governmental organisations (NGOs) to make money. Justice Oliver Wendal Holmes (US Supreme Court 1841-1935), once said that taxes are the price we pay for a civilized society. | 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. This write-up, therefore is simply to. The net amount due to the supplier is US$970. In the year 2001, the Internal Revenue Act, 2000, Act 592, was enacted and came into force on 16 February 2001. It is the employer's responsibility to file monthly tax returns on behalf of its employees. A deduction to the extent of 100% of the contribution made if it has been made to the following: a) The National Defence Fund or the Prime Ministers National Relief Fund, b) The Prime Ministers Armenia Earthquake Relief Fund, c) The Africa (Public Contribution-India) Fund, d) The National Foundation for Communal Harmony, e) The Chief Ministers Earthquake Relief Fund, Maharashtra, f) The National Blood Transfusion Council, k) The Andhra Pradesh Chief Ministers Cyclone Relief Fund, 1996, m) The Chief Ministers Relief Fund or Lieutenant Governors Relief Fund, in respect of any State or Union Territory, as the case may be, subject to certain conditions, n) The University or educational institution of national eminence approved by the prescribed authority, o) The National Sports Fund to be set up by the Central Government, p) The National Cultural Fund set up by the Central Government, q) The Fund for Technology Development and Application set up by the Central Government, r) The national trust for welfare of persons with autism, mental retardation, cerebral palsy and multiple disabilities. Partners in Health, Oxfam, BRAC, International Rescue Committee, PATH, CARE International, Mdecins Sans Frontires, Danish Refugee Council and Ushahidi make up the top ten. Are religious organisations required to pay taxes and/or comply with the tax laws of Ghana? Financial Statement for the year of filling. The net amount due to the supplier is US$970. 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. List of Grant Funding for Individuals & Grants for NGOs. Initially it was exactly the scenario but with increase in unscrupulous practices these NGOs were made liable to pay tax and also allowed exemption. Signing up on Ghana.GOV. any function other than operating as a religious institution; and, iii. NGOs can accept donations from private individuals, for-profit companies, charitable foundations, and governments, whether local, state, federal, or even foreign. For tax exemption purposes, a religious organisation must not engage in business the purpose of which is to make profit. 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. Posted 3 April 2017 Lerato says: 3 April 2017 at 11:41 In which circumstances will a non profit organisation pay tax? Who or that has been issued with a written ruling by the CG currently in force stating that it is an exempt organisation; and, c.None of whose income or assets confer, or may confer, a private benefit, other than in pursuit of the organisations functions. However, the value of the transaction is less GHS2,000 (approx.. US$420). spiritual consultation fee. The commitment to paying taxes is low. 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. For many in the latter category, the life style indicator of the proprietors suggests higher ability to pay. 15 best maternity jeans that are actually comfortable, GRIDCo participates in International Day for Women and Girls in Science programme, Nigerian elections 2023: False claims and viral videos debunked, I smashed Major Mahama with cement block Killer, Come clear on 600k barrels Russian crude oil aboard MT Theseus IES to government, NIA to print more Ghana cards as government clears $100m debt, Tinubu is the best person for the job Buhari hails president-elect, Zamalek president jailed for one month for insulting Al Ahly rival, Accra 2023: Postponed Africa Games confirmed for March 8-23, 2024. It is for the organisation, simpliciter. 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. 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. poor girls are given the chance to attend University. Therefore, where the income is to the benefit of a specific individual, that income is subject to tax unless generally exempt. Sanction of persons for non-compliance. The survey appears to suggest that the scope of personal taxation within the formal private sector may be greater than seems to be commonly recognized. Therefore it cant be implied from the nature of a charitable or voluntary or religious organization or any such organization that carries out social or economic or developmental programs to reach to those people where even the government cannot reach. Yes, But the salaries which NGOs pay are much lower than the corporate work. Calculating taxes can be tedious, even more so if you are not sure about the rates and percentages. 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. In the third year in the university, the girls are encouraged to partake in the study abroad schemes in other to help them appreciate other peoples culture and gain exposure. Considering the enormous powers of the CG, if he fails to enforce the law, who should we blame? conferring a private benefit on any person other than a benefit that is in pursuit of a function for which the entity is established, Act 896 does not define public nature. An expense that is of a capital nature includes an expense that secures a benefit that lasts for more than twelve (12) months. Lastly, the income thereof should not be for private benefit of individuals. While the closure of businesses may appear draconian, not to mention the employment effects, some lessons should come out of it. Copyright 2016, All Rights Reserved. BENEFITS AVAILABLE TO THE NGO & CONTRIBUTORS: An NGO by getting itself registered u/s. No. The church is required to withhold tax of US$250 on payments to the supplier and pay same to the Ghana Revenue Authority. The exercise led to the shutdown of a number of tax delinquent companies. The salary in NGOs are totally depends on NGOs income and investments. The church is required to withhold tax of US$30 on payments to the supplier and pay same to the Ghana Revenue Authority. Employees of . In Matthew 22:21, Jesus was asked by the Pharisees whether it is lawful to pay taxes to the emperor, or not. My understanding of Jesus statement Render unto Caesar that which is Caesar's" is that it unambiguously commands people to respect state authority and to pay the taxes it demands of them. Constitution and prohibition of the organisational activities. 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. Lets take a hypothetical illustration below to ascertain how the income of a religious leader (such as a pastor) should be taxed. Do NGOS pay tax in Ghana? A summary of the goods and services which are exempt from VAT/NHIL and GETFund include: This classification includes all live animals such as cattle, sheep, goats, swine and poultry, but excludes horses, asses, mules, hinnies and similar exotic animals. Careers This resource describes the legal framework governing nonprofit organizations (also known as non-governmental organizations or NGOs) in Uganda, . 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. Where such is the case, it is quite worrisome, and it requires immediate action. This legal status makes it easier for NGOs to operate, as they are not required to pay tax on the funding they receive from government bodies, donors, and other sources. Am Looking for a Sponsor. We should, therefore, consider having similar Charity Commission established by an Act of Parliament in Ghana and tweak it to meet our needs. The views expressed do not necessarily represent those of PwC. They should be encouraged to complete annual tax returns and make quarterly payments towards tax revenues and for social security payments. It enforces the provisions of the tax acts and serves as the first arbiter between parties in the event of a dispute. Individuals are taxed based upon their income from employment, business and investment. 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. I hope it wouldnt take a court to compel the CG to do what he is supposed to do. 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 number of goods and services are exempt from VAT under the VAT Act, 2013 (Act 870) law (S. 15 Section 35/ Schedule 1). Hence, you should know the various taxes to pay and the rates. Tax benefits. [Emphasis mine] Exempt organisation was defined in Section 94 to mean a person. Income subject to Tax under the Tax Law, a. Helping Street Children And Empower Local Womem. 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. And political interpretation of the exercise only further calls attention to those who are most affected and their aversion to comply with tax laws. Companies limited by guarantee including NGOs are exempted from paying corporate taxes. they are socially, politically, economically educationally and even morally helpful to the country. 10% ceiling of the Gross Total Income applies, Government or any NGO approved local authority , institution or association used for the promotion of family planning, 10% ceiling of the Gross Total Income does not apply. E Plaza 2 Building, Accra, Ghana, P.O.BOX AN 16859, Accra North Ghana, Accra. In this instance, though, this cynicism is wrong. Importer or agent pays fees and obtains a vehicle toll pass and a waybill from Ghana Ports and Harbors Authority (GPHA). Do your tax with TaxTim and WIN R10,000 T&C's apply. For Individual Support and Sponsorship Use Contact Form. 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). You have entered an incorrect email address! So far as income tax is concerned, in many cases the law will at a practical level normally result in an NGO not having an income tax liability. e.The photography services constitutes services. Overseas Shipper Tax. The use of a pastor is by no means an attempt to limit the taxation to only churches and/or pastors. Third, there is a fundamental issue of whether we are sharing the tax burden fairly? they have been specified in the law, or in any other case, the procedure to enforce such exemption has been followed). Average salary in Ghana is 306,223 GHS per year. African Centre for Peace Building, AFCOPB. In reality, this understanding may not be true in all the cases. Prevailing view in some circles is highly critical of such exercises as politically motivated. They equally have a license Certificate to Operate their Headquarters from Accra Metropolitan Assembly of Jurisdiction with Reg. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. 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. 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. It is actually the opposite. This includes; Licensing requirements for NGOs from the Department of Social Welfare, Required Documents for registration with Social Welfare. Payroll deduction of those who worked in the financial service industry was about 77%, and only 45% in the manufacturing and transport sectors. That dictum, of course, leaves open the debate on whether taxes are too high or too low relative to the protection and services that one derives from the state. The NGOs which cannot generate their own income are completely depends on funders to pay their employer cost. A026/10/22. The maximum income tax rate in 2015 for single big earners is 39.6% on income over $413,200, amounting to tax due from Mayweather of about $120 million, barring any tax deductions he could claim. All rights reserved. The poverty rate is estimated to have slightly increased from 25 percent in 2019 to 25.5 percent in 2020. There are two interpretations to this finding. The Ghana Revenue Authority (GRA) is the government body mandated to collect and assess taxes. 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. SSBI's are not required to pay gift or inheritance taxes, as long as they apply for exemptions thereof by filing their gift taxes. Taxable supplies include sale of anointing oil, bottled water, consultancy services, rental of premises, training, sale of magazines, diaries, calendars, stationery, Bible, and Quran. This can be done where the operating vehicle is through the establishment of Trusts, for example. Under Section 10(1)(d) of Act 592, it was provided that the income accruing to or derived by an exempt organisation other than income from any business is exempt from income tax. 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. After 14 years following the passage of the Income Tax Ordinance, then came the Income Tax Decree, 1975, S.M.C.D 5. does not confer a private benefit on any person other than in pursuit of a function or activity that is in line with the objects of the entity. There are increased calls from the public for regulation of the sector. gifts from church members in the United Kingdom, etc. Given our history in the early 1980s, such cynicism is understandable. The employment income of the pastor is US$8,333.33 per month. As a result, the exemption from tax of the income of a religious organisation is not applicable to the individuals. 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. The employer is required to withhold the employees taxes and pay to the Ghana Revenue Authority. 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. It is, therefore, important for the Ghana Revenue Authority to develop training programme to educate all charitable organisations including religious organisations to ensure full compliance with the tax laws. Construction and renovation of church premises. Who or that is and functions as a religious organisation of a public character ; b. 35AC of the Act. Therefore, once the threshold for registration is met or expected to be met, it becomes mandatory for the registration to be done within 30 days. 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