Taxes can be an intimidating topic for many entrepreneurs in Ghana. But understanding how they work is essential for the success and sustainability of your business. This guide breaks down the fundamentals of small business taxation in Ghana so you can meet your obligations confidently and avoid penalties.
Do Small Businesses Pay Taxes in Ghana?
Yes, they do. All businesses in Ghana, from sole proprietors and informal traders to partnerships and large companies, are required to pay taxes to the government.
After registering your business name with the Registrar General’s Department, you must also register with the Ghana Revenue Authority (GRA) before conducting any taxable activities. Failing to do so can result in fines, legal action, or even imprisonment in severe cases.
Where Do You Pay Small Business Taxes in Ghana?
Understanding the institutions responsible for tax collection will help you remain compliant and organized. Here are the main bodies you will interact with:
Ghana Revenue Authority (GRA)
The GRA is the national body responsible for assessing, collecting, and enforcing tax laws in Ghana. It operates through two main divisions:
- Domestic Tax Revenue Division (DTRD): This division manages domestic taxes such as income tax, withholding tax, capital gains tax, gift tax, and value added tax (VAT). It categorizes taxpayers into large, medium, and small offices based on annual turnover.
- Customs Division (CD): This division handles taxes on imports and exports, and operates at all ports, borders, airports, and post facilities. Its role includes facilitating trade while protecting public interest and safety.
Additionally, depending on your location, you may also deal with Metropolitan, Municipal, and District Assemblies (MMDAs), which collect local taxes such as property rates, business licenses, and market tolls.
Types of Business Taxes in Ghana
Small businesses are subject to various taxes based on factors such as business type, location, and industry. There is no fixed tax rate specifically for small businesses, but the taxes generally fall into two categories:
- Direct taxes: Levied on income or profit
- Indirect taxes: Applied to goods and services
Here are the most common taxes that small business owners in Ghana should be aware of:
1. Corporate Income Tax (CIT)
If you operate a registered company, including non resident businesses, friendly societies, or partnerships with limited liability, you are required to pay Corporate Income Tax.
- Standard CIT rate: 25 percent
- Higher rate for mining and petroleum companies: 35 percent
- Reduced rates: Available to businesses in specific sectors or locations. For example, young entrepreneurs in agro processing, technology, or manufacturing enjoy a 1 percent rate for the first five years.
CIT is paid in four equal installments, due at the end of each quarter: March 31, June 30, September 30, and December 31.
Sample CIT Rates by Business Type:
| Company Type | Tax Rate (%) |
|---|---|
| Non traditional exporters | 8 |
| Mining and petroleum | 35 |
| Hotel industry | 22 |
| Trusts | 25 |
| Loans to farms or leasing companies | 20 |
| Lottery operators | 20 |
| Manufacturers in regional capitals | 18.5 |
| Manufacturers outside Accra, Tema, and regional capitals | 12.5 |
| Free Zone (domestic sales after 10 years) | 25 |
| Free Zone (exports after 10 years) | 15 |
2. Personal Income Tax (PIT)
This applies to business income earned by sole proprietors and partners. This includes:
- Fees for services
- Trading stock income
- Profits from asset sales
- Gifts and payments related to business activities
If your monthly income exceeds GH¢402 and you are outside the informal sector, you are required to pay PIT. The rate ranges from 5 to 35 percent based on your income bracket.
PIT Rates in Ghana:
| Chargeable Income (GHS) | Rate (%) |
|---|---|
| Up to 402 | 0 |
| Next 110 | 5 |
| Next 130 | 10 |
| Next 3,000 | 17.5 |
| Next 16,395 | 25 |
| Next 29,963 | 30 |
| Over 50,000 | 35 |
| Non residents | 25 (flat rate) |
3. Value Added Tax (VAT)
VAT is charged on the sale of goods and services. Businesses collect VAT from customers and remit it to the GRA. This multi stage tax is applied at each point of the supply chain.
Standard VAT rate: 15 percent
Reduced VAT rates for retailers:
| Annual Turnover | VAT Rate (%) |
|---|---|
| GHS 200,000 to 500,000 | 3 |
| Over GHS 500,000 | 15 |
| Exported goods and designated services | 0 |
VAT registration is mandatory for businesses with an annual turnover above GHS 200,000. You must also use the GRA’s Certified Invoicing System to issue compliant tax invoices.
VAT Filing Deadline: Last working day of the month following the reporting period.
VAT Exempt Goods and Services Include:
- Live animals
- Educational and medical services
- Goods for persons with disabilities
- Transport and construction materials
- Crude oil and hydrocarbon products
4. National Health Insurance Levy (NHIL)
This 2.5 percent levy supports Ghana’s National Health Insurance Scheme and applies to most VAT taxable goods and services. Retailers with an annual turnover between GHS 200,000 and GHS 500,000 are exempt.
NHIL follows the same rules as VAT regarding exemptions and deadlines.
5. Ghana Education Trust Fund Levy (GETFL)
GETFL is also charged at 2.5 percent on VAT taxable goods and services. It funds improvements in Ghana’s education system and follows the same rules as VAT and NHIL.
Businesses with turnovers below GHS 500,000 are generally exempt.
6. Income Tax Stamp
For businesses in the informal sector, the Income Tax Stamp replaces traditional income tax payments. It is a simplified system based on your business category.
Businesses eligible for tax stamps include:
- Dressmakers and tailors
- Hairdressers and barbers
- Chop bar operators
- Food sellers and hawkers
- Artisans (masons, welders, electricians, etc.)
- Market traders
- Container or kiosk vendors
- Susu collectors
You can register and pay for an income tax stamp at any nearby Taxpayer Service Centre.
Final Thoughts
Paying taxes may seem daunting at first, but with the right knowledge and tools, you can fulfill your obligations with ease. Whether you are a sole proprietor, freelancer, or small business owner, understanding how taxes work in Ghana is essential for compliance and long term growth.
Stay informed, register your business properly, and always seek professional advice when needed. By staying ahead of your tax responsibilities, you are building a stronger foundation for your business to grow and succeed.