Privacy Policy Condition of Use For many in the latter category, the life style indicator of the proprietors suggests higher ability to pay. The country director shared that working in an NGO comes with a lot of accountability and audits. Value Added Tax (VAT), National Health Insurance Levy (NHIL), and Ghana Education Trust Fund Levy (GETFund). From the foregoing, the total amount payable to the Ghana Revenue Authority is US$610. It applies to Mallams, Imams, Traditional Priest (e.g. 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. Africa Health Research Organization is situated in PO Box AN6731, Ghana. An NGO will receive Government Funding, only if registered under section 12A & 80G. The church is required to withhold tax of US$250 on payments to the supplier and pay same to the Ghana Revenue Authority. 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. With respect to resident persons, the income must be derived from, accrued in, brought into or received in Ghana. The views expressed do not necessarily represent those of PwC. operation of a bookshop; and. Misconception #1 - Understanding of the term 'Charitable activities'. The headquarter of this NGO is in Accra, Ghana. After all taxes are compulsory payments and the individual measure of gains cannot be a sensible rule to go by in deciding whether or not to comply with the law. Ordinary meaning can, therefore, be given to the stream of income attributable to religious organisations that are exempt from tax. They equally have a license Certificate to Operate their Headquarters from Accra Metropolitan Assembly of Jurisdiction with Reg. : DSD/6634. It is the employer's responsibility to file monthly tax returns on behalf of its employees. Who procured it and for what? Are religious leaders or founders, and employees of religious organisations required to pay taxes and/or comply with the tax laws of Ghana? Therefore, the vehicle of operation should not be by a company with shares. For tax purposes, a company is a separate and distinct entity from its employees and affiliates. As highlighted, taxation of the NGO sector is much more complicated than many initially assume. NGOs play a pivotal role in our society. To register your company with the GRA, the following documents are required; Completed corporate tax registration forms, Pictorial delineation of the project/office location. Tax benefits. Section 10(1) of Act 179 provides that a Company Limited by Guarantee shall not be incorporated with the object of carrying on business for the purpose of making profits. As provided by the Act only 85% of the total income received by an NGO is to be utilized and the remaining 15% is accumulated for later use and corpus fund forms a part of such remaining income. This has come to strengthen my position.Thanks, Jonathan Casely Wiredu (FMVA,MSc,BCom,HND). 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. Perhaps the area that can cause the most confusion is in relation to agreements entered into with Government entities, which frequently will include some commitments from the Government in relation to fiscal matters. vii. In the year 2001, the Internal Revenue Act, 2000, Act 592, was enacted and came into force on 16 February 2001. In Matthew 22:21, Jesus was asked by the Pharisees whether it is lawful to pay taxes to the emperor, or not. A religious organisation that seeks the approval of the CG for tax exemption must have a written constitution with express provisions that prohibit it from: i.engaging in a political party activity, supporting a political party or using its platform to engage in party politics; ii. Using an Umbrella Company for Income Tax : Lastly, the income thereof should not be for private benefit of individuals. 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. The irony is that, for most donor countries, direct taxes (personal and corporate income taxes) remain the workhorse of the tax system and help to finance aid. The net amount due to the supplier is US$4,750. Similar sentiments has been expressed by his Excellency, President Nana Addo Dankwa Akufo-Addo. The Ministry of Finance and Economic Planning is responsible for overseeing the GRA. The following are important to take note of, one of legal frameworks governing the NGO sector is the Income Tax Act 1997. Changes after Registration of Company Limited by Guarantee. An expense is deductible if it is wholly, exclusively and necessarily incurred by the person in the production of the business or investment income for the year. To be on the safe side, do your due diligence and research extensively. NGO staff receive a salary for the work they do. Consequent upon the above, it is advisable for the CG as part of assessing religious organisations to tax to determine the vehicle of operation of the religious organisation to form the basis of how to approach and determine the assessment. The annual turnover from the taxable supply must exceed GHC200,000 or part thereof in a quarterly or monthly period. Procedures for registering a company limited by guarantee (Not-for-profit / NGO). Firstly, whilst it is true that in certain cases NGOs will have relief from income tax on the NGO entity itself, and from certain indirect taxes, any such relief is normally subject to conditions. Individuals are taxed based upon their income from employment, business and investment. i. When the revenue exceeds the expenses of the NGO, it is then that such organization earns profit. The TCCs serve as tax credits towards annual tax payable. Ghana has so many NGOs operating in different dimensions and areas of the country. These . No. The income of an individual may arise from sources including, i. Terminal clerk cross-checks and confirms that the correct fees have been paid. But progress has been slow since, especially when it comes to personal income and business profit taxes. This was in recognition of the contribution these organisations made in society as they prioritised the helping of the poor and needy whilst lifting the spiritual welfare of the people. Youth World Travel Organization (YWTO) is situated in Ghana. Not-for-profit organisations or Guarantee companies typically retain any surplus income for re-investment or use it to promote the non-profit objectives of the business rather than distribute profits to members. There is no reason to believe that the individuals who did not have taxes deducted at source are inherently non-tax complaint. First and foremost, the type of organisation should be religious in nature. 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. Tax In Namibia. The World Bank defines NPO's as "private organizations that pursue activities to relieve suffering, promote the interest of the poor, protect the environment, provide basic social services, or undertake community development.". Top Management The net amount due to the supplier is US$970. The World Bank grouped NGOs into two. NGOs are also exempt from customs duties under the EAC-CMA which is the law that regulates customs in all the EAC partner . This is because shares confers beneficial interest in a company to only identifiable members. What is the procedure for compulsory registration of a permanent establishment business in Ghana? 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. 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. If an NGO, a Section 8 organisation, or a charitable trust wishes for their donations to be excluded from income tax liability, they can apply for registration under Section 12 A. Income subject to Tax under the Tax Law, a. 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. Articles designed exclusively for use by the disabled. The church is, therefore, required to withhold tax of US$300 on payments to the School and pay same to the Ghana Revenue Authority. The NGO also functions in some areas of West Africa as follows: Benin, Burkina Faso, Liberia, Nigeria, and Sierra Leone. Income of religious leaders and/or employees of religious organisations. In the said case, the court held that the person whose liability to tax was being assessed was thus Oxford University, which the court held to be indubitably an educational institution of a public character. Notwithstanding the above, there are avenues or vehicles through which religious organisations can engage in profit-making activities without contravening any law. Can an NGO be converted into a Company Limited by Shares? This is the law on taxation of income currently in force. Furthermore, it will go a long way to help promote a charity sector geared towards their traditional role of helping the poor and needy whilst building the spiritual life of the people. Do non-profit/ non-governmental organisations (NGOs) deserve a special tax regime? 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. Therefore, the applicable withholding tax rate is 15%. 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. Women receive a salary of 260,912 GHS. Justice Oliver Wendal Holmes (US Supreme Court 1841-1935), once said that taxes are the price we pay for a civilized society. However, the practice notes issued by the CG regards activities of a religious organisation to be of public nature where, by its activities and operations, it, i.is open or accessible to the general public or a section of the public; and. Save my name, email, and website in this browser for the next time I comment. The writ of mandamus is of special value in such cases where there is a legal right but no specific legal remedy for enforcing such right.(Emphasis mine). Again, your answer is as good as mine. To achieve the intended purposes, NGOs require funding and normally this is in the form of contributions and grants that have been derived from other profit-making activities, that would have been taxed already. A resident of India having a taxable income and a non-resident having an Indian passport can claim for benefits if they have made a donation to an NGO which is registered with the Income Tax Department and holds tax exemption status u/s. After you are registered as an NGO, you can apply for tax exemption through your country's revenue agency. Salaries are different between men and women. This classification should, however, be distinguished from zero-rated supplies. Redempta Maira is a Senior Manager, Tax Services at PwC. Well, simply put it is because the assumption of an automatic tax free environment for NGOs is mistaken. e.The photography services constitutes services. Submit filled forms at the Company Registration Counter for Verification and Capturing or via Online. 12A of the Act within a year from the date of its establishment can avail exemption from the payment of tax u/s.11 of the Act. Am Looking for a Sponsor. Financial Statement for the year of filling. 1. Customs duties. Notwithstanding the fact that a religious organisation is not required to pay income taxes on receipts incidental to their objects, the law requires them to file their corporate income tax returns with the Ghana Revenue Authority within four month after each financial year of the organisation. First, personal income tax compliance is unevenly enforced across different sectors of the economy and by occupations. Ms Chisanga was commenting on government's decision to issue statutory instrument 103 suspending tax exemption facility for NGOs. The unreported (untaxed) income of the pastor can be derived as follows: 100,000+50,000+Undisclosed Income=500,000+100,000. For Individual Support and Sponsorship Use Contact Form. What concerns us now is the degree of compliance. Concept of NGO and Income Tax Provisions. Scholarships for Study in Africa Scholarships for African Students Undergraduate Scholarships African Women Scholarships & Grants Developing Countries Scholarships . Such pernicious inequities in the tax burden have in the past contributed to smuggling in no small measure of exports. 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. 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. Salaries, wages, overtime, leave pay, bonus, and similar employment income. the objective of the organization is to bring assistance to humanity by supporting the material, sports, education, and well-being of the poor physically challenged and the less privileged in Ghana. 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. Therefore, to the extent that the activities of a religious organisation is required to be of public character as per Act 896, where lies in the taxation of business income of a Company Limited by Guarantee? The more senior the job within the NGO, the higher the wages will be. 35AC of the Act. Income of an approved Real Estate Investment Trust. You must send a letter to the Comptroller of Customs that indicates the type of activity that your organisation is engaged in, that the efforts of the organisation are non-profit, and how the duty relief would benefit the wider public. NGO and Paying Tax. 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. Status as Religious Organisation for income tax purposes. 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. Tax law, a company limited by guarantee ( Not-for-profit / NGO ) indicator of the country which religious can. May arise from sources including, i. 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