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January 15, 2019
2019-5070

Ghana enacts various tax amendments

Executive summary

The Parliament of Ghana has enacted the following laws:

  • The Income Tax (Amendment) (No. 2) Act, 2018, Act 979
  • The Value Added Tax (Amendment) (No. 2) Act, 2018, Act 980
  • The Excise Tax Stamp (Amendment) Act, 2018, Act 981

The Acts were assented to by the President on 28 December 2018 and gazetted on 31 December 2018. None of the Acts sets forth an effective date. Consequently, the Acts came into force on 31 December 2018. The Ghana Revenue Authority subsequently issued a public notice that the Acts should commence from 1 January 2019 though this is at variance with the provision of the law.

This Alert outlines the key provisions of these laws.

Detailed discussion

The Income Tax (Amendment) (No. 2) Act, 2018, Act 979

1. Paragraph 1 of the First Schedule to the Income Tax Act, 2015, Act 896 (as amended) has been amended as follows:

a) Annual Income Tax Rates applicable to Resident Individuals

Chargeable Income (GHS)
Rate (%)
Tax (GHS)
Cumulative Chargeable Income (GHS)
Cumulative Tax (GHS)

First 3,456

Nil

—

3,456

—

Next 1,200

5

60

4,656

60

Next 1,680

10

168

6,336

228

Next 36,000

17.5

6,300

42,336

6,528

Next 197,664

25

49,416

240,000

55,944

Exceeding 240,000

30

   

b) Monthly Income Tax Rates applicable to Resident Individuals

Chargeable Income (GHS)
Rate (%)
Tax (GHS)
Cumulative Chargeable Income (GHS)
Cumulative Tax (GHS)

First 288

Nil

—

288

—

Next 100

5

5

388

5

Next 140

10

14

528

19

Next 3,000

17.5

525

3,528

544

Next 16,472

25

4,118

20,000

4,662

Exceeding 20,000

30

   

2. Section 116(10) of the Income Tax Act, 2015, Act 896 (as amended) provides for the taxation of the supply of goods, works or services by nonresident persons. The Act does not provide for the withholding tax rate for the income of nonresident persons whose income has a source in Ghana under Section 116(10). The amendment requires that resident persons withhold 20% tax from payments under a contract with nonresidents for the supply of goods, works or services, where the contract gives rise to income from Ghana.

The Value Added Tax (Amendment) Act, 2018, Act 970

1. Section 50 of the VAT Act, 2013, Act 870 has been amended to allow registered taxpayers to apply for a refund of their excess credit directly attributable to locally manufactured textiles which are subject to zero rate as provided in the Second Schedule of the Act. The Commissioner-General may refund the excess credit attributable to the period upon the receipt of an application for refund of the excess credit.

2. The zero-rated supplies under the Second Schedule to the Value Added Tax Act, 2013, Act 870 (as amended) has been expanded to include a supply of locally manufactured textiles by a local manufacturer, who has been approved by the Minister responsible for Trade and Industry, up to 31 December 2021.

The Excise Tax Stamp (Amendment) Act, 2018, Act 981

1. Section 2 of the Excise Tax Stamp Act, 2013, Act 873 has been amended to include locally manufactured textiles among the class of goods for which an excise tax stamp is to be affixed.

A product unit has been defined to mean the smallest package in which a product is usually presented and retailed except for the following:

a) Cigarettes are “the pack”

b) Textiles are “six yards”

For additional information with respect to this Alert, please contact the following:

Ernst & Young Ghana, Accra
  • Robin McCone | robin.mccone@gh.ey.com
  • Isaac Sarpong | isaac.sarpong@gh.ey.com
Ernst & Young Advisory Services (Pty) Ltd., Africa ITS Leader, Johannesburg
  • Marius Leivestad | marius.leivestad@za.ey.com
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
  • Rendani Neluvhalani | rendani.mabel.neluvhalani@uk.ey.com
  • Byron Thomas | bthomas4@uk.ey.com
Ernst & Young LLP, Pan African Tax Desk, New York
  • Dele A. Olaogun | dele.olaogun@ey.com

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