Guide to Building a Profitable eCommerce Website, Self-Hosted LMS or Cloud LMS We Help You Make the Right Decision, ULTIMATE GUIDE TO BANJO TUNING FOR BEGINNERS. 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. 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. The unreported (untaxed) income of the pastor can be derived as follows: 100,000+50,000+Undisclosed Income=500,000+100,000. The entity has a written constitution that prohibits that entity from, i.engaging in a party political activity, supporting a political party or using its platform to engage in party politics, ii. Where an NGO procures goods or services from persons not liable to charge VAT or from non-resident suppliers, it is required to self-account for the VAT and remit same to the FIRS. Some tax laws are complex, not easily understood. "However, before you are exempted from paying certain taxes, the individual must go to GRA with a. Signing up on Ghana.GOV. The religious organisation must also apply to the CG for the grant of the status of being a religious organisation as a way of serving as check and balances to curtail abuse of the tax exemption process. vii. d.Taxation of the Business and Investment Income of Religious. In 1961 (fourteen years later), the Income Tax Ordinance introduced the concept of exemption from payment of income taxes by ecclesiastical or charitable organisations, Christian Council of Churches, the Muslim Council, et al. Ordinary meaning can, therefore, be given to the stream of income attributable to religious organisations that are exempt from tax. That is to say, wherever the income is earned, however the monies/benefits are paid, it is subject to tax in Ghana insofar as the person earning the income is resident in Ghana unless exempt. The poverty rate is estimated to have slightly increased from 25 percent in 2019 to 25.5 percent in 2020. NGOs are organizations that are independent of any government and help to promote economic growth, human rights and social progress. 1. Do NGOs pay tax in Ghana? There are countless times when weve (donors) gone out there and weve seen flaws and weve actually cancelled grants. The predefined criteria include being a resident entity of public character that is established for relief of poverty or distress of the public, advancement of education, or provision of general public health, education, water or road construction or maintenance. She could neither sue in tort nor in contract. Renovation of the church painting, repairs and related construction activities etc. In order to be eligible for SSBI status an organization has to meet all conditions as set by the Dutch tax authorities. The annual employment income of the pastor of US$100,000 [8,333.33*12months] is subject to employment income tax (PAYE) using the graduated scale. 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. 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. Consumer and industrial products and services. The country director shared that working in an NGO comes with a lot of accountability and audits. The School is not into the business of rental of commercial premises. 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. Scholarships for Study in Africa Scholarships for African Students Undergraduate Scholarships African Women Scholarships & Grants Developing Countries Scholarships . 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. Unlike the Operation Tax Harvest in the early days of the tax reforms, the 2006 exercise followed the tax amnesty granted in 2005 with the hope to increase compliance in the payment of taxes. While the closure of businesses may appear draconian, not to mention the employment effects, some lessons should come out of it. operation of commercial transport. 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. International Federation of Women Lawyers (FIDA), Ghana, Kantudu Youth For Education And Development (Kayed), Northern Childcare Voluntary Organisation, Northern Sector Action On Awareness Centre (Norsaac), Nsaba Ghana Schools (now located at Nsaba Ghana Community Projects), Oulamii Sooj African Drum & Dance Academy, Pro-Action Network in Education & Skill Training, Poverty Eradication, Youth Empowerment, And Wealth Creation, Regional Advisory Information & Network Systems, Science & Technology Advocacy Renaissance, The Hope Centre Mercy Ministries International, Volta Youth Soccer & Cultural Dancing Academy, Wunnam Northern Development Organisation, helping the less Privileged Children Through Quality Education, www.communityaidinternational.blogspot.com, Youth For Tradition International Exchange, Youth In Advancement In Community Development, Youth Embassy Net Organization (Free the Blind). f.Establishment of Charity Commission, The Corporate governance in the Charity industry in Ghana appears not to be robust enough to build trust that assures all and sundry that assets of these organisations are safeguarded. Where such is the case, it is quite worrisome, and it requires immediate action. ; US$5,000, b. As noted earlier, the degree of compliance varied greatly in the private sector. Calculating taxes can be tedious, even more so if you are not sure about the rates and percentages. The organization is working in Associations business activities. A deduction to the extent of 100% of the contribution made if it has been made to the following: a) The National Defence Fund or the Prime Ministers National Relief Fund, b) The Prime Ministers Armenia Earthquake Relief Fund, c) The Africa (Public Contribution-India) Fund, d) The National Foundation for Communal Harmony, e) The Chief Ministers Earthquake Relief Fund, Maharashtra, f) The National Blood Transfusion Council, k) The Andhra Pradesh Chief Ministers Cyclone Relief Fund, 1996, m) The Chief Ministers Relief Fund or Lieutenant Governors Relief Fund, in respect of any State or Union Territory, as the case may be, subject to certain conditions, n) The University or educational institution of national eminence approved by the prescribed authority, o) The National Sports Fund to be set up by the Central Government, p) The National Cultural Fund set up by the Central Government, q) The Fund for Technology Development and Application set up by the Central Government, r) The national trust for welfare of persons with autism, mental retardation, cerebral palsy and multiple disabilities. the name was changed in 2007 to Sports and Youth Development Organization Ghana. In this instance, though, this cynicism is wrong. Income Exempt from Tax under the Tax Law, The law does not specifically mention incomes that are attributable to religious organisations which are not subject to tax. Instead, when the NGO has met the predefined criteria and has a ruling to be recognised as a charitable organisation, then it will be granted an additional tax deduction equal to 25% of its income. The Bible says in Luke 11:28, , blessed are those hearing the word of God and keeping it. Top Management It enforces the provisions of the tax acts and serves as the first arbiter between parties in the event of a dispute. Submit filled forms at the Company Registration Counter for Verification and Capturing or via Online. b. 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. The highest income tax rate payable by an individual resident in Ghana is 25%. 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. Residents are subject to tax at rates ranging between 0% and 30% on the following annual graduated scale of income: You have entered an incorrect email address! Second, if taxation is based on the benefit principle, that is, individuals must pay taxes according to their measure of benefits, then the evidence is that it is largely those employed in the public sector, in mining, and the financial sector, in that order, who see any benefits from paying taxes. The evidence is scanty. This definition limited tax exemption to the Christian Church with regards to their income other than derived from business. 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. Third, because the tax burden is borne by the few, it is to be expected that the actual rates may be high in order to raise any needed revenue and a higher rate itself discourages compliance. STEP 4- Company limited by guarantee regulations form. their aim was to provide an umbrella for the physically challenged, destitute, and less privileged youths in Ghana through activities like sports, education, healthcare and the art of helping one another. However, NGOs like any other organization are subject to the tax regime of Uganda. Tax and duty can be waived on goods imported for a charitable purpose, or for use in a not-for-profit enterprise. In the third year in the university, the girls are encouraged to partake in the study abroad schemes in other to help them appreciate other peoples culture and gain exposure. If you enter only ghana.gov in your browser, you won't find the website. Your answer is as good as mine. Salaries, wages, overtime, leave pay, bonus, and similar employment income. With the above set of facts, it is clear that the total of the monies used to buy the vehicles, house and shares exceeds the pastors employment income. Income tax is that tax which is chargeable a persons income for a year of income. The Wikimedia Foundation is ranked as the best NGO worldwide. The more senior the job within the NGO, the higher the wages will be. Conditions. Speaking in the same interview, the CEO of KankoAssociates, Mary Tobbin Osei supported Mr Nkaws position, as a donor, adding that NGOs are unbending when it comes to accountability. Status as Religious Organisation for income tax purposes. Do NGOs pay taxes in Uganda? After 14 years following the passage of the Income Tax Ordinance, then came the Income Tax Decree, 1975, S.M.C.D 5. No. The Ministry of Corporate Affairs brought a uniform accounting and reporting framework for NGOs. The renovation is considered as works. operation of a bookshop; and. An Non-Government Organisation,as we understand, is engaged with socio-economic activities catering to the needs of the general public at large and do not come under the ambit of the Income Tax Act, 1961. 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. Taxed at 30%. I say so because, how many of our religious organisations file their annual returns with the Registrar of Companies? But the big deal here is that you still have to pay them. i. Governing Board, Click on the representative below to chat on WhatsApp or send us an email to info@gra.gov.gh, Copyright 2022, All Right Reserved, Ghana Revenue Authority. Hse. Using an Umbrella Company for Income Tax : An NGO is an exempt organization under the Act. : DSD/6634. However, even if these agreements make a commitment to provide beneficial tax treatment, including exemptions, such commitments can only be enforced if they have effect under the relevant tax law (i.e. By necessary implication, the route for undertaking religious organisations in Ghana may be by a Company Limited by Guarantee under the Companies Act, 1963, Act 179, or by a Trust registered under Trustees (Incorporation) Act, 1962, Act 106 with no particular individual(s) being ultimate beneficiary(ies). In that audit, the company will have to supply the following relevant company source documents; During an audit, the tax officers typically assess whether the source documents agree with the audited financial statement that has been submitted to the GRA. Flowing from the foregoing, it is imperative that there should be a paradigm shift in our deliberation on the position of the law with regards to taxation of religious organisations. gifts from church members in the United Kingdom, etc. 4. It is based in Accra Ghana. For tax exemption purposes, a religious organisation must not engage in business the purpose of which is to make profit. After you are registered as an NGO, you can apply for tax exemption through your country's revenue agency. But, he's put the right spin on his tax situation by . However, should the religious organisations operating vehicle be by way of for example Trust with individuals as ultimate beneficiaries, the business profits shall be taxable. The withheld tax must be paid to the Ghana Revenue Authority within 15 days following the month to which the payment relates. With respect to resident persons, the income must be derived from, accrued in, brought into or received in Ghana. Concept of NGO and Income Tax Provisions. Taxable supplies include sale of anointing oil, bottled water, consultancy services, rental of premises, training, sale of magazines, diaries, calendars, stationery, Bible, and Quran. U/S. Allowable deductions include the following: Interest incurred by a person in borrowing money or in the production of income; Digital Services Registration for Non-Resident, Integrated Customs Management System (ICUMS). iv. The tax withheld must be filed and payment made by the 15, NGO as a Corporate Shareholder of a Company Limited by Shares, Annual General Meetings for Company Limited by Guarantee, A complete annual returns form from Registrar Generals Department. To be on the safe side, do your due diligence and research extensively. TAX LIABILITY OF NGOs: 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. Nice Article. 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. In addition to all these, what has been made taxable are the kind of anonymous donations made by any organization or institutions or individual to a charitable organization at a rate of 30%. Therefore, if we create a robust system where evidence of donations serves as a basis for deduction by individuals, it could make traceability of religious organisations income easier. As a result, for tax purposes, any profit generated by Trusts which have ultimate beneficiaries as individuals, exposes their business income to tax. The following are important to take note of, one of legal frameworks governing the NGO sector is the Income Tax Act 1997. Tennis legend Roger Federer is the number five highest-earning athlete in 2015. What makes tax evasion by persons and businesses possible is that it is difficult to track through payroll records, most often inadequately kept, and it is difficult to assess profits from proprietary businesses. A number of goods and services are exempt from VAT under the VAT Act, 2013 (Act 870) law (S. 15 Section 35/ Schedule 1). From the historical analysis above, there are key underlying themes running through all the various tax dispensations. The Revenue Administration Act, 2016, Act 915, gives the CG several powers to enable him enforce the law. c.Provision of services such as training, or consultancy. The entity is established to operate as a religious institution which is of a public nature, b. Individual Donors for Education 2023/2024; 3000+ Grants, Donors and Foundations Providing Support and Individual Support for Education. Our government agencies must be up and doing to ensure compliance with the laws of Ghana by all. File Annual Returns at Fifty Ghanaian Cedi (GHS 50) together with Audited Account. conferring a private benefit, other than in pursuit of a function of the entity as a religious institution. The expenses in the Profit and Loss statement must be traced to the cash book, with supported payment receipts accordingly, The salaries and wages figure in the Profit and Loss tally with the PAYE filings. Such pernicious inequities in the tax burden have in the past contributed to smuggling in no small measure of exports. The GST law specifically defines the term . We have a series of layers of audits, the donors come for verification, the donors look for an external auditor, and you also have to look for an external auditor, he mentioned. The net amount due to the supplier is US$970. Many nonprofit organisations are taxable, but may be entitled to special rules for calculating taxable income, lodging income tax returns and special rates of tax - see 'Income tax exemption' on page 10. . The net amount due to the supplier is US$970. Please feel free to contact us for your Customs classifications and validation, Copyright Notice The highest income tax rate payable by an individual resident in Ghana is 25%. And to achieve that, the tax burden must be shared equitably on the basis of ability to pay. Governing Board, Click on the representative below to chat on WhatsApp or send us an email to info@gra.gov.gh, Copyright 2022, All Right Reserved, Ghana Revenue Authority, Digital Services Registration for Non-Resident, Integrated Customs Management System (ICUMS), Agriculture, veterinary, fishing and horticulture, Mining (as specified in the mining list) and dredging; and. For domestic transactions, examples include, works (5%); goods (3%); services (7.5%); etc. This is in compliance with Section 124 of Act 896. What are the other tax obligations of NGOs? Now we know NGO workers get paid, let . Therefore, the applicable withholding tax rate is 3%. The bilateral and multilateral aid is one of the biggest sources of funding we have seen over the past fifty and more years. In other words, so long as a charitable organisation uses at least 75% of its income in their charity activities then there will be no taxable income. The surplus income can be utilized to carry on with the activities towards the fulfillment of the objective of the particular NGO. In the year 2001, the Internal Revenue Act, 2000, Act 592, was enacted and came into force on 16 February 2001. Therefore, the amount due the service provider is US$300. Study in Africa Scholarships for African Students Undergraduate Scholarships African Women Scholarships & amp ; Grants Countries... Gives the CG several powers to enable him enforce the law 14 years the. Persons income for a year of income salaries, wages, overtime, leave pay, bonus, similar. Are countless times when weve ( Donors ) gone out there and actually... Mention the employment effects, some lessons should come out of it and employment! Is estimated to have slightly increased from 25 percent in 2020 Counter for Verification and Capturing or Online. Blessed are those hearing the word of God and keeping it in Luke 11:28,, blessed those... 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