globaltaxnews.ey.comSign up for tax alert emailsForwardPrintDownload | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24 January 2018 Ghana amends Income Tax Act with certain tax exemptions and incentives The Parliament of Ghana has passed the Income Tax (Amendment) (No. 2) Act, 2017. The Act was assented to by the President on 29 December 2017 and the gazette notification was issued the same day. Accordingly, the Act came into force on 29 December 2017. The Act provides for an exemption from tax for income from an approved unit trust scheme or mutual fund as well as an approved real estate investment trust (REIT). The Act pegs the tax-free income of a resident individual at the national minimum wage and provides for accelerated depreciation for manufacturers and importers of stamping machines used for the implementation of the excise tax policy which was launched in Ghana in August 2017. The Act also provides for tax incentives for young entrepreneurs and privately-owned universities in Ghana. Finally, the Act abolishes the tax on lotto winnings. Income from an approved unit trust scheme, mutual fund or approved REIT has been exempted from tax. Previously, income of an approved unit trust or mutual fund was taxed at 1% after the ten year tax holiday whereas the income of a REIT was taxed at 25%. The income tax brackets for resident individuals has been reviewed. The new brackets peg the tax-free segment at the national minimum wage. The new and the old brackets are as follows:
The income of a young entrepreneur1 from the business of manufacturing, information and communication technology, agro processing, energy production, waste processing, tourism and creative arts, horticulture and medicinal plants has been exempted from tax for a period of five years. The applicable tax rate after the initial five-year tax holiday is as follows:
Additionally, a young entrepreneur who carries on any of the above-mentioned operations has been permitted to carry forward an unrelieved loss for a period of five years. Accelerated depreciation has been granted over a period of two years – on a straight-line basis – to importers and manufacturers of stamping machines used for the implementation of the Excise Tax Stamp Policy which is expected to commence in 2018. The Act has also exempted profits earned by privately-owned universities from tax provided they reinvest 100% of the profits earned into their business. Tax on lottery winnings has been abolished. Winnings were previously taxed at 5% on the gross amount. 1. A young entrepreneur has been defined in the Act to mean an entrepreneur who is not more than thirty–five years old.
Document ID: 2018-5185 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
