OUR SERVICES. COMPLIANCE. ADVISORY. PAYROLL MANAGEMENT. Corporate Employee Agency Obligations. General Advisory Tax Planning. TAX HEALTH CHECK. A A & K CONSULTING SERVICES LIMITED. CONTEMPORARY TAX ISSUES. Integration of Revenue Agencies
In 2010 two major tax policy initiatives were introduced:
Ghana Revenue Authority (GRA) Act 2009 [Act 791] merged:
All powers of pre-integration Commissioners are now vested in the Commissioner-General e.g.
Domestic tax initiatives include:
International tax initiatives include:
Withholding taxes on payments by residents to:
Section 3 of Act 592 imposes a final withholding tax on the following payments
ServiceTax Rate (%)
Endorsement Fees 15
Management & Technical Service Fees 15
A withholding tax of 5% applies where the contract sum exceeds GH¢50.00
The threshold raised from GH¢50.00 to GH¢500.00
The rate of tax imposed on taxable gifts is to be increased to 15%.
2 Types of VAT Schemes
(i) VAT Invoice Scheme (VIS)
(ii) VAT Flat Rate Scheme (VFRS)
Exemptions from payment of import duty
What is Double Taxation?
Double Taxation has been defined as the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject matter.
Negative Effects of Double Taxation
It results in multiplicity of taxes
It inhibits the free flow of investment and trade activities
Purpose of Double Taxation Agreements
Due to the negative effects of Double Taxation, nations have deemed it expedient to enter into Double Taxation Treaties toward attainment of the following:
LEGAL AUTHORITY FOR GHANA TO ENTER INTO DOUBLE TAXATION ARRANGEMENTS
ENTRY INTO FORCE
BASIS FOR TAXING EACH REVENUE ITEM
Source of Revenue – e.g. Directors Fees. Employment etc
Residence of tax payer – e.g. Business Profit, Air and Shipping Transport
Sharing – e.g. Dividends, Interest, Royalties etc. shared between Treaty Partners
To benefit from a reduction in the Ghanaian Rate of Tax or exemption from Ghanaian tax, a Resident of the other contracting state is required to provide the proof below to the Commissioner-General of the Ghana Revenue Authority.
The essence of the proof is to prevent ‘Treaty Shopping’ that is a situation where a resident of a non-contracting state tries to enjoy the benefits of a Double Taxation Agreement between two other states.
NOTE:Under dividends in the DTA, the rates of 5% or 7.5% Are applicable where the beneficial owner has at least 10% Interest in the company paying the Dividend.
Double Taxation Treaties provide some tax incentives and exemptions that pave the way for the free flow of trade and investment activities.
It is important for residents of the contracting states to acquaint themselves with the provisions of the relevant conventions so as to take full advantage of the opportunities therein.