Majority of Ghanaians will be hit with massive increase in the taxes they pay following the implementation of the new income tax law by the Ghana Revenue Authority (GRA) to replace the repealed Internal Revenue Act, (Act 592).
[contextly_sidebar id=”UFyMkkBxOU6pDEtpozHQrT599McWdVE3″]Per the new law, which took effect from January 1st 2016, a number of areas which prior to the review were exempted from taxes have now been included while some areas that initially attracted taxes will see some increases.
Majority of individuals and most companies will be affected by the new law which has seen massive uproar from majority of Ghanaians.
Per the new rule all interest paid to an individual will attract 1 percent tax this means any interest accrued on treasury bills, fixed income deposit, interest from banks among others will attract a tax of 1 percent.
Interest or dividend paid to a member or holder of an approved unit trust or mutual fund is taxed at one per cent where the holder is an individual and eight percent if otherwise.
Fees or allowances given to resident director/manager of a company a board member or trustee will now attract 20 percent tax.
Meanwhile commissions to insurance agents, sales persons, resident lotto receivers and agents will also attract 10 percent taxes.
Fees to lecturers, invigilators, examiners, part time teachers, non executive directors, board members and endorsement fees will also attract 10 percent tax.
Lottery winnings will attract a tax of 5 percent, supply of services 15 percent, supply of works 5.
Companies will still pay 25 percent corporate tax, companies principally engaged in the hotel industry will still pay 22 percent ax on their operations, while those who export non -traditional goods will also still pay 8 percent.
Manufacturing business located in regional capitals except Accra and Tema will attract 75 percent of corporate tax (25%) while those located outside the regional capital will attract 50 percent of corporate tax (25%).
Chargeable income derived by financial institution from loan granted to a farming enterprise in the production of income of the enterprise as well as Chargeable income derived by financial institution from loan granted to a leasing company to fund acquisition of asset for lease will attract tax of 20 percent each.
Landlords and home owners will also be affected by the new law per the law.
Income derived from letting for sale of low cost affordable residential premises approved by Minister for Works and Housing for the first 5 years will now attract a tax of 1 percent.
Rent of residential property for individuals and non residential property will now attract a tax of 8 and 15 percent respectively.
Now if you are in the agricultural industry the new taxes will also affect your operations especially if you are into agro processing .
Per the new law all agro processing businesses conducted fully in the country for the first 5 years will now pay 1 percent tax, cocoa by product business also conducted fully in the country for the first 5 years will also attract 1 percent tax. Tree crop farming and cash crop or livestock excluding cattle for the first five years will also attract 1 percent tax.
Withholding tax on services is now 15 percent, there is however a reduction on withholding rate on goods from 5 to 3 percent.
There is also now a 5 percent withholding rate on provision of any work, while subcontractors that perform works or services for or in connection with a petroleum agreement are now liable to a 15 percent withholding tax.
Meanwhile pensions have now been included as an exempt income.
By: Vivian Kai Lokko/citifmonline.com/Ghana