Notwithstanding the above, there are avenues or vehicles through which religious organisations can engage in profit-making activities without contravening any law. For PwC updates on tax and other matters do follow @pwc_tz or visit our website www.pwc.co.tz. My contribution is directed towards the Commissioner-General (CG) and his officials, the Government of Ghana, Tax Professionals and Students, and the Academia in our attempt to educate the religious fraternity, and the general public, in particular, the ordinary man in madina trotro. [Emphasis mine] Exempt organisation was defined in Section 94 to mean a person. While the closure of businesses may appear draconian, not to mention the employment effects, some lessons should come out of it. 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. On the assumption that the pastor had already paid income tax in Ghana on his employment income and gift he received in the UK, he should also pay income tax on his undisclosed income of US$450,000. 4. It applies to Mallams, Imams, Traditional Priest (e.g. The resources and income generated by the entity should not be assigned to, or distributed among the owner(s) or their associates. Similarly, Act 179, requires all Companies and Trusts to file their annual accounts (returns) with the Registrar of Companies. It is based in Accra Ghana. Application letter on the organizations official letterhead, Memorandum of understanding between the NGO and the Government. Civil engineering public works. A relief is an allowance given to a resident individual to reduce his or her tax burden. Ghana has so many NGOs operating in different dimensions and areas of the country. Taxation of a resident person in Ghana is based upon the principle of worldwide taxation. any function other than those that the entity is established to operate; and, iii. . Second, the tax collection drive has revealed that tax delinquent businesses include church run businesses, stevedoring companies, foreign exchange bureaus, restaurants, hotels, and shipping yard companies, all of which are service providers in one form or the other, and, most likely, owned by people with distinguished lifestyles. 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. The question is: whether or not a religious organisation is required to register for the VAT? No. Very helpful. A number of goods and services are exempt from VAT under the VAT Act, 2013 (Act 870) law (S. 15 Section 35/ Schedule 1). The Golden Opportunity Organization Ltd. is situated in Accra, Ghana. 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. iii. b. All voluntary or charitable organisation as defined U/S.2(15) of the Act has the liability to pay service tax on the income actually received by them, except for that donation which has been specified to be corpus by the donor in writing. Thus, it may have come from, use of the churchs tithes and offering to his personal benefit, and. An expense that is of a capital nature includes an expense that secures a benefit that lasts for more than twelve (12) months. 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. The withheld tax must be paid to the Ghana Revenue Authority within 15 days following the month to which the payment relates. The 1947 Ordinance outlined the first provision of exemption from tax by charitable organisations including religious organisations. Overseas Shipper Tax. BECAUSE, THE LABOURERS I WILL ENGAGE THIS WEEK ARE NOT THE SAME LABOURERS I WILL ENGAGE NEXT WEEK. An honorarium is considered employment income for income tax purposes and is therefore subject to deductions. However, before you are exempted from paying certain taxes, the individual must go to GRA with a justification or demonstration that the resources being used are directly impacting the rural communities and contributing towards government efforts.. However, if an NGO working for women empowerment earns profit by selling off the handicrafts made by the women employed by them shall not be made taxable. 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. Please feel free to contact us for your Customs classifications and validation, Copyright Notice The Wikimedia Foundation is ranked as the best NGO worldwide. However, the Ghana Living Standards Survey carried out in 1998/99 gives us some indication about which groups of individuals most likely are paying taxes and who is not. it was established and registered in December 2001 with the Registrar Generals Department and the Department of Social Welfare. iv. 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. Scholarships for Study in Africa Scholarships for African Students Undergraduate Scholarships African Women Scholarships & Grants Developing Countries Scholarships . The Department of Social Development under the Ministry of Gender, Children and Social Protection does not have the power and legal backing to deal with these pertinent issues. NGOs are also exempt from customs duties under the EAC-CMA which is the law that regulates customs in all the EAC partner . 3. For sure, this is not limited to withholding payroll taxes. 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. Subsequent to the above, the current practice is that the Church will have to procure Tax Credit Certificate (TCC) from the Ghana Revenue Authority to serve as evidence of payment of provisional taxes by the suppliers or service providers. 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. Taxes in Ghana at a glance, but obsolete. The accounts of religious organisations must, among others, capture all receipts and payments for each year, and a statement of financial position of the company or trust, as the case may be. a. Please feel free to contact us for your Customs classifications and validation, Copyright Notice VAT is applicable on all taxable supply of goods and services provided in, and imported into Ghana unless exempt. Non-resident individuals pay taxes at the flat rate of 25%. Employees of . g.Investigation of non-compliance with charity rules; h.Establishment of charity courts; and, i. But that is an entirely different matter. 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. The survey also re-classified taxpayers by employer and the results were fairly predictable. Of government employees, withholding taxes covered about 68% of those who worked in the utilities. For new business tax registration, provisional tax assessment is determined by the GRA office in consideration of the objects of the business, stated capital and the nationality of the shareholders. Such a reaction would be natural bearing in mind that they normally set out to support good causes for particular groups of persons - in most cases the poor, women, elderly and children, and with the main focus areas including health, education, environment, social and political welfare - and without a profit motive. Top Management The Revenue Administration Act, 2016, Act 915, gives the CG several powers to enable him enforce the law. Kasoa, Down-Town, KD 195/9, Accra, Ghana View map. Individual Donors for Education - Funding Grants for NGOs - Children's Homes - Orphanage Funding and Support - Click Here! It specifically exempted religious bodies Catholic, Anglican, and Presbyterian Churches from paying duties on imported items. The use of a pastor is by no means an attempt to limit the taxation to only churches and/or pastors. This exclusion was removed in the Finance Act 2007 - and whilst arguably, one could still seek to rely on common law principles to insist on the need for a profit motive, it appears that this change was seeking to make such a motive unnecessary. From the aforesaid provisions in Act 896, the lawmaker has empowered the CG to grant and revoke the tax exemption for religious institutions to promote tax compliance in Ghana. Justice Oliver Wendal Holmes (US Supreme Court 1841-1935), once said that taxes are the price we pay for a civilized society. Procedures for registering a company limited by guarantee (Not-for-profit / NGO). But, he's put the right spin on his tax situation by . U/S. The rate for the withholding of the taxes depends upon the nature of transaction and residency of the supplier. 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. 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. The Company is working in Secretarial Services, Associations business activities. 35AC of the Act. A deduction shall be disallowed for an expense that is of a capital nature. After 14 years following the passage of the Income Tax Ordinance, then came the Income Tax Decree, 1975, S.M.C.D 5. The highest income tax rate payable by an individual resident in Ghana is 25%. 21ST CENTURY INITIATIVES A local NGO which uses Drama as its mode of Education a non for profit for poverty reduction,health and education assistance for Ghanaian communities. And to achieve that, the tax burden must be shared equitably on the basis of ability to pay. 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. | 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. c.Provision of services such as training, or consultancy. Jesus responded Render unto Caesar the things that are Caesar's, and unto God the things that are God's. 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. This will help the efforts in bringing sanity in terms of the objects of religious organisations, how they operate, among others. In Ghana, tax is deducted from an employees personal income at source through a pay-as-you-earn scheme. Can an NGO be converted into a Company Limited by Shares? 2. This is good. Business Income of a Religious Organisation. Secondly, the organisation should have a public character. If you are an established business operating in Ghana, one of your key obligations is to pay your taxes. Any additional day is Gh, Income tax After each quarter (March, June, September, December), you pay Gh, Annual financial statements After the last working day of April, you will pay Gh, Copies of payment receipts for general and operational expenses, Custom import documents as evidence for importation, VAT invoices must agree with the Monthly VAT filings, Monthly VAT filings must agree with the reported Annual turnover figure in the financial statement. As already indicated, the Constitution of Ghana, 1992, the Income Tax Act, and the Holy Bible all require a pastor, as a man of God and a good citizen, to disclose his income to the Ghana Revenue Authority for an assessment to be made in compliance with law. The EAC partner limited by Shares, Memorandum of understanding between the NGO and the results were predictable. Is to pay your taxes do ngos pay tax in ghana Developing Countries Scholarships the supplier the tax... 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