Income Tax Salary in Ghana

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An income tax is a tax imposed on individuals or entities in respect of the income or profits earned by them. Income tax generally is computed as the product of a tax rate times the taxable income. Taxation rates may vary by type or characteristics of the taxpayer and the type of income.

Below is Income Tax Salary in Ghana

Ghana taxes its resident individuals on income from any employment, business, or investment, whether or not the source from which the income is derived has ceased.

Resident individuals are taxed on their worldwide income, and, as such, foreign-sourced income is taxable.

However, an exemption exists for the employment income of a resident individual who exercises one’s employment outside Ghana and is employed by a non-resident employer or by a resident employer, where that individual is present outside Ghana for more than 183 days.

The following are examples of income from employment, business, and investment a resident individual is taxed on:

Gains and profits from any employment, including any allowances and benefits paid in cash or given in kind to or on behalf of an employee other than in respect of reimbursement of an expense of an employee used in relation to the employment, medical or dental cost, or any passage from or to Ghana, and redundancy pay.

Gains or profits from trade, business, profession, or vocation.

Gains from the realization of assets and liabilities.

Gifts.

Dividends.

Any charge or annuity.

Royalties, premiums, and any other profits arising from property.

Receipts, including royalties or periodic or deferred payments, of any kind derived from any transaction wherever and whenever made, affecting directly or indirectly, and/or from any natural resources in Ghana, and notwithstanding whether the receipts are paid within or outside Ghana.

Non-residents are liable to Ghanaian income tax on any income derived in Ghana from any trade, business, profession, or vocation, or which is derived from an employment exercised in Ghana.

Personal income tax rates

Residents are subject to tax at rates ranging between 0% and 30% on the following annual graduated scale of income:

Chargeable income (GHS)Rate of tax (%)
First 3,8280
Next 1,2005.0
Next 1,44010.0
Next 36,00017.5
Next 197,53225.0
Exceeding 240,00030.0

How is tax calculated on salary in Ghana?

The tax is charged up to 50% of the basic salary at a rate of 5%. If the overtime paid is more than 50% of the employee’s monthly basic salary, the excess of 50% is taxed at 10%. Tax on Bonus:

This is a 5% tax charged on the total bonus up to 15% of an individual’s basic salary.

How can I avoid tax in Ghana?

Tips to Reduce your Business Tax in Ghana

Keep proper records of all expenses. Most small business owners often blur the lines between personal expenses and business expenses.

Keep a fixed assets register.

Outsource some services.

Make payments and submit financial statements on time.

Make provisional payments.