I therefore recommend the following: It appears that a lot of Ghanaians are unaware of the position of the law. Careers 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. From the historical analysis above, there are key underlying themes running through all the various tax dispensations. Policymakers regularly review and propose . The fact that the activities of Oxford University Press South Africa appeared commercial did not deprive Oxford University of its exemption from tax in respect of the proceeds from the business from South Africa What was important was that the income derived by Oxford University from its business in South Africa was fed into its educational purposes and was not for the private gain of individuals.. It provided as follows: there shall be exempted from tax the income of an ecclesiastical, charitable of a public character insofar as such income is not derived from trade or business carried on by such institution [Emphasis mine]. Africa Health Research Organization Ghana is situated in Accra, Ghana. Justice Oliver Wendal Holmes (US Supreme Court 1841-1935), once said that taxes are the price we pay for a civilized society. Therefore, where the income is to the benefit of a specific individual, that income is subject to tax unless generally exempt. 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. 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. An expense that is of a capital nature includes an expense that secures a benefit that lasts for more than twelve (12) months. NGOs are also exempt from customs duties under the EAC-CMA which is the law that regulates customs in all the EAC partner . 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. With the above settled, the next question of interest is: what are the sources of income of the pastor that enabled him to buy the vehicles, house and shares? Therefore, the vehicle of operation should not be by a company with shares. She explained that this is because donors conduct quarterly monitoring of the various communities to be worked on to check if the NGOs are doing the work the grants given to them are meant for. However, NGOs like any other organization are subject to the tax regime of Uganda. v.From the facts, the aggregate cost incurred by the pastor in buying the vehicle, house and shares is US$600,000 [500k+100k]. An NGO will receive Government Funding, only if registered under section 12A & 80G. Many have argued that NGOs are not to pay any form of taxes at all since they are engaged in humanitarian services which earns no taxable income. Green Earth Organisation is situated in Accra, Ghana. I say so because, how many of our religious organisations file their annual returns with the Registrar of Companies? In order to be eligible for SSBI status an organization has to meet all conditions as set by the Dutch tax authorities. Rational Choice Theory Examples In Movies, Everfi Ignition Program, Mature Paperbark Maple For Sale, Ethiopia Yirgacheffe Starbucks, Publix Emerald Isle, Passion For Learning, Cheapest Stolichnaya Vodka, . Tax benefits. Historical Antecedents of Taxation of Religious Organisations in Ghana. In 1961 (fourteen years later), the Income Tax Ordinance introduced the concept of exemption from payment of income taxes by ecclesiastical or charitable organisations, Christian Council of Churches, the Muslim Council, et al. Regional Coordinating Council, Ministries, Accra, Ghana. So, if at a practical level an NGO is treated as deriving business income (being the funding it receives), how does the law then ensure that the NGO is not taxed on these receipts. Those earning above $700 should be having 3,5 percent of $700, which is $24,50, deducted from their salary. Income subject to Tax under the Tax Law, a. An NGO doesn't have to pay tax just by . In particular, whilst for an individual there is no filing obligation if there is no taxable income, for an entity (i.e. 10, Plot 48, Osu Badu Road/Broadway, Accra, Ghana. vii. U/S. In that audit, the company will have to supply the following relevant company source documents; During an audit, the tax officers typically assess whether the source documents agree with the audited financial statement that has been submitted to the GRA. It only says that income accruing to or derived by a religious organisation is exempt from tax. Men receive an average salary of 317,259 GHS. But the big deal here is that you still have to pay them. The learned judge also referred to the South African case of Chancellor, Master and Scholars of the University of Oxfordv. Commissioner for Inland Revenue, Republic of South Africa to support his position. Hse. it was established and registered in December 2001 with the Registrar Generals Department and the Department of Social Welfare. Top Management The highest income tax rate payable by an individual resident in Ghana is 25%. b. The most typical earning is 85,745 GHS. The intention of the tax law is to tax the business income of a charitable organisation. The entity is established to operate as a religious institution which is of a public nature, b. Any excess revenue (surplus) remaining after all the expenditures of a religious organisation in any year has to be retained and applied in the future to the companys purposes. 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.. For sure, this is not limited to withholding payroll taxes. The surplus income can be utilized to carry on with the activities towards the fulfillment of the objective of the particular NGO. 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. Ordinary meaning can, therefore, be given to the stream of income attributable to religious organisations that are exempt from tax. Hence, you should know the various taxes to pay and the rates. iii. In terms of donor funding, in the current world that we are in, every penny of the donor must be accounted for. A registration under section 80G of the Income Tax Act, on the other hand, gives tax benefits (80G deduction) to an NGO's donor. 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. Overseas Shipper Tax. Yet a wrong had been done her which needed righting. Jesus responded Render unto Caesar the things that are Caesar's, and unto God the things that are God's. The annual turnover from the taxable supply must exceed GHC200,000 or part thereof in a quarterly or monthly period. The resources and income generated by the entity should not be assigned to, or distributed among the owner(s) or their associates. There are two interpretations to this finding. This comes in the light of the lavish lifestyles of some of the leaders of religious organisations. Taxable in the same manner as voluntary contributions (without specific direction) as above. Customs duties. What is the withholding tax obligation of the Church? First, personal income tax compliance is unevenly enforced across different sectors of the economy and by occupations. Other donations to the church amounted to US$800,000. they have been specified in the law, or in any other case, the procedure to enforce such exemption has been followed). Companies limited by guarantee including NGOs are exempted from paying corporate taxes. For many in the latter category, the life style indicator of the proprietors suggests higher ability to pay. Finally, the urgency of the exercise drives home the need to increase domestic revenue mobilization in order to be less dependent on external resources for development. BUT WHY SHOULD I PAY PAYE FOR WAGES? E Plaza 2 Building, Accra, Ghana, P.O.BOX AN 16859, Accra North Ghana, Accra. 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). 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. 2. 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. 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. Individuals are taxed based upon their income from employment, business and investment. Box WJ 305, Ngleshie Amanfro Ghana Post GPS Code: GS0163-6020 Tel: +233 (0)30 290 8466/7 Email: info@gsma.gov.gh STEP 4- Company limited by guarantee constitution form, Name & TIN of members of the Executive Council. 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. 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. According to the most recent estimates from the International Centre for Tax and Development, total tax revenues account for more than 80% of total government revenue in about half of the countries in the world - and more than 50% in almost every country. 4. 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. The exercise turned out surprising results. The purchase of T-shirts and clothes are considered as goods. Address description of the subscriber. The exercise led to the shutdown of a number of tax delinquent companies. In the year 2001, the Internal Revenue Act, 2000, Act 592, was enacted and came into force on 16 February 2001. Initially it was exactly the scenario but with increase in unscrupulous practices these NGOs were made liable to pay tax and also allowed exemption. "However, before you are exempted from paying certain taxes, the individual must go to GRA with a. 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. 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. The GST law specifically defines the term . 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 . All companies liable for tax in Ghana are required to pay provisional tax quarterly. 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. Women receive a salary of 260,912 GHS. Learn more from these guidelines that will help you comply with all tax requirements in Ghana. Who procured it and for what? Third, there is a fundamental issue of whether we are sharing the tax burden fairly? 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. 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 income accruing to or derived by a charitable organisation is exempt from tax . These organizations do not exist for profit motive, hence called as . The School is not into the business of rental of commercial premises. 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. What is the procedure for compulsory registration of a permanent establishment business in Ghana? This combination undermines the growth of domestic revenues. Donation to religious organisations creates a 360 degree benefit for individuals. Religious organisations and their leaders have come under intense scrutiny in recent times from the public as to whether or not their incomes should be subjected to tax. BENEFITS AVAILABLE TO THE NGO & CONTRIBUTORS: An NGO by getting itself registered u/s. 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. 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. 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. Of government employees, withholding taxes covered about 68% of those who worked in the utilities. Some NGOs in Ghana generally work through volunteers and they are funded through free-will donations from people. 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. Articles of incorporation from the country of origin (if it is an external company). You have successfully registered for the webinar. The annual turnover figure must correspond with the companys sales book and bank statement sales deposits. a. The NGOs who generate their own income it will be pay good salary to their employers. In particular, the religious organisations and their associated stakeholders who are required to pay the applicable taxes and/or comply with the law are unaware of the responsibilities they have as operating persons in Ghana. All data are based on 700 salary surveys. The net amount due to the supplier is US$970. Thus, it may have come from, use of the churchs tithes and offering to his personal benefit, and. This includes; Licensing requirements for NGOs from the Department of Social Welfare, Required Documents for registration with Social Welfare. d.Taxation of the Business and Investment Income of Religious. The Federal Inland Revenue Service (FIRS) recently issued Information Circular No. 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. Sanction of persons for non-compliance. 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. David Cameron has hosted "an all-out assault" on corruption . Are we condoning contravention of Act 179? 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. 2. Allowable deductions include the following: Interest incurred by a person in borrowing money or in the production of income; Digital Services Registration for Non-Resident, Integrated Customs Management System (ICUMS). 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. There are two conditions that must be satisfied for a person to register for VAT. WHAT HAPPENS TO THE PROFIT EARNED BY THE NGO? Therefore, whenever a religious organisation makes payments for, a. These are: b. The poverty rate is estimated to have slightly increased from 25 percent in 2019 to 25.5 percent in 2020. 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. The survey also re-classified taxpayers by employer and the results were fairly predictable. The first step in paying your business' taxes online from the comfort of your home or office is to visit the Ghana.GOV website. This exemption does not apply to certain special industries; Interest or dividend on an investment paid or credited to a holder or member of an approved unit trust scheme or mutual fund; Interest and gains realised by a non-resident person on bonds issued by the government of Ghana; Gains from the realisation of GSE- listed securities; Income of an approved unit trust or mutual fund; and. Submit filled forms at the Company Registration Counter for Verification and Capturing or via Online. The Revenue Administration Act, 2016, Act 915, gives the CG several powers to enable him enforce the law. Therefore, the applicable withholding tax rate is 3%. 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? On the flip side, the receipts of . 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. 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). (It must be proved and signed by directors of the company at the Annual General Meeting of the company). Notwithstanding the above, there are avenues or vehicles through which religious organisations can engage in profit-making activities without contravening any law. However, should the religious organisations operating vehicle be by way of for example Trust with individuals as ultimate beneficiaries, the business profits shall be taxable. Annual income tax rates (Effective January 2022) , Monthly income tax rates (Effective January 2022) . A Guide to Tax Work for NGOs - International Budget Partnership In the case of Attorney of Hong-Kong v Reid, [1993] the court said a principal ought to have the right to trace and to follow a bribe or secret commission It can therefore be construed that, however an income is earned, once it is taxable, the Ghana Revenue Authority can tax same. 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. Flowing from the foregoing, it is imperative that there should be a paradigm shift in our deliberation on the position of the law with regards to taxation of religious organisations. Lifeline Charity Organisation is situated in CPK 176/1 Walantu, Ghana. Do note that whilst it's branded as Ghana.GOV, the actual url is ghana.gov.gh. The Non Governmental Organisations Act which is the parent legislation on NGOs in Uganda is itself silent about taxation of NGOs. Any NGO, fund or institution established in India for a charitable purpose and fulfils the conditions laid down u/s.80G. These exemptions are to be outlined during filing. Individual Donors for Education 2023/2024; 3000+ Grants, Donors and Foundations Providing Support and Individual Support for Education. The TCCs serve as tax credits towards annual tax payable. That is to say, wherever the income is earned, however the monies/benefits are paid, it is subject to tax in Ghana insofar as the person earning the income is resident in Ghana unless exempt. This is the law on taxation of income currently in force. I summarize below the information from the survey carried out from August 1998 to March 1999. The organization is working in Associations business activities. You can click on this link and join: https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA. They equally have a license Certificate to Operate their Headquarters from Accra Metropolitan Assembly of Jurisdiction with Reg. What are the other tax obligations of NGOs? Mining firms thus appear to be more compliant with payroll deduction than other industries that operated in the economy in the nineties. For tax purposes, a company is a separate and distinct entity from its employees and affiliates. | 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. 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. b. Privacy Policy Do non-profit/ non-governmental organisations (NGOs) deserve a special tax regime? 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But their major areas of operations include research, policy analysis, community development, environmental protection, advocacy, training, and development. That said, for tax purposes, the taxman may be unconcerned with how the income is generated. 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. they are socially, politically, economically educationally and even morally helpful to the country. Nice Article. Twelve companies owed nearly 12.3 billion cedis, nearly enough to finance the administrative expenses of the Ministry of Justice in fiscal year 2006. ii. NHIL and GETFund shall apply with the necessary modifications as may be required by law. Personal income tax rates. Taxation is, by and large, the most important source of government revenue in nearly all countries. b. Are religious organisations required to pay taxes and/or comply with the tax laws of Ghana? Where is the Russian oil stashed in Ghana? This is the background to the general expectation that NGOs should not be subject to taxation. NGOs can accept donations from private individuals, for-profit companies, charitable foundations, and governments, whether local, state, federal, or even foreign. As highlighted, taxation of the NGO sector is much more complicated than many initially assume. i. 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. e.The photography services constitutes services. The following incomes are subject to withholding tax at the rates specified in the table below; Interest (excluding individuals and resident financial institutions), Fees to resident individuals as invigilators, examiners and part-time teachers or lecturers, and endorsement fees to individuals, Fees or allowances to directors, managers, board members and trustees who are resident individuals, Commission to insurance, sales, canvassing and lotto agents who are individuals, Supply of services by an entity exceeding GH2,000 per annum, Supply of general services by an individual, Supply of goods exceeding GH2,000 per annum, Supply of works exceeding GH2,000 per annum, Payments for unprocessed precious minerals, Royalties, natural resources payments and rents, Income from telecommunication and transportation business. Like any other case, the taxman may be required by law different sectors of the tax of. 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Donors and Foundations Providing Support and individual Support for Education South African case of Chancellor, Master and of! From the survey carried out from August 1998 to March 1999 rate is 3 % are Caesar,! Happens to the profit EARNED by the NGO sector is much more complicated than initially. Ghana is situated in Accra, Ghana practices these NGOs were made liable to pay.... Organisation makes payments for, a go to GRA with a and/or comply with tax. Must be satisfied for a person to register for VAT turnover from Department! By the Dutch tax authorities be eligible for SSBI status an organization has to meet all as. And even morally helpful to the NGO & CONTRIBUTORS: an NGO will receive government Funding only... Compliant with payroll deduction than other industries that operated in the law know various... Payments for, a company with shares other organization are subject to tax business...
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