In the United Kingdom, for example, they have a Charity Commission responsible for regulating the charity sector. Green Earth Organisation is situated in Accra, Ghana. 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 nonprofit entities, they also. (All goods and services exempt from VAT are also exempt from the NHIL and GETFund). 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. 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. 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. It specifically exempted religious bodies Catholic, Anglican, and Presbyterian Churches from paying duties on imported items. Given our history in the early 1980s, such cynicism is understandable. With the above settled, the next question of interest is: what are the sources of income of the pastor that enabled him to buy the vehicles, house and shares? Under Section 10(1)(d) of Act 592, it was provided that the income accruing to or derived by an exempt organisation other than income from any business is exempt from income tax. Of government employees, withholding taxes covered about 68% of those who worked in the utilities sector, 78% of those in community and social services, and 95% of those who worked in professionals, administrative, and clerical staff positions. Resident persons are taxed on their worldwide income while non-resident persons are taxed on income which has a source in Ghana. But, he's put the right spin on his tax situation by . 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. Learn more from these guidelines that will help you comply with all tax requirements in Ghana. The net amount due to the supplier is US$4,750. Misconception #1 - Understanding of the term 'Charitable activities'. I smashed Major Mahamas head with a cement block Accused person tells court, How Bagbin ordered two NDC MPs to retract anti-Jean Mensa submissions, Bola Ahmed Tinubu: 10 key points about the Lagos 'landlord' set to lead Nigeria, Im a wizard Kyiri Abosom concedes as Delay bombards him with questions, Meet the late Ndebugre's son eyeing Zebilla constituency seat, Ablakwa vs. Rev. A recommended letter from the district, municipal or metropolitan assembly responsible for the area where your NGO is to be located. The income accruing to or derived by a charitable organisation is exempt from tax . This will help the efforts in bringing sanity in terms of the objects of religious organisations, how they operate, among others. Application letter on the organizations official letterhead, Memorandum of understanding between the NGO and the Government. No. Uganda's Income Tax Act provides that an organization is exempt from paying income tax if it falls within the definition of "exempt organization" under Section 2 (bb) of the Income Tax Act and has been issued a formal . Such a reaction would be natural bearing in mind that they normally set out to support good causes for particular groups of persons - in most cases the poor, women, elderly and children, and with the main focus areas including health, education, environment, social and political welfare - and without a profit motive. And it is widely believed that those who must enforce compliance are not without blame. African Youths for Peace And Organization is situated in Mataheko, Ghana. In Tanzania, NGOs can apply to be recognised as charitable organisations, subject to written applications filed with the Commissioner of TRA. Historical Antecedents of Taxation of Religious Organisations in Ghana. Notwithstanding the above, there are avenues or vehicles through which religious organisations can engage in profit-making activities without contravening any law. Therefore, the applicable withholding tax rate is 3%. This can be done where the operating vehicle is through the establishment of Trusts, for example. That dictum, of course, leaves open the debate on whether taxes are too high or too low relative to the protection and services that one derives from the state. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Congratulations! Who procured it and for what? The country director shared that working in an NGO comes with a lot of accountability and audits. Laboratory equipment for educational purposes and library equipment. The CG is appointed by the President in compliance with section 13(1) of the Ghana Revenue Authority Act, 2009, Act 791. Purchase of anniversary T-Shirts and Clothes; US$1,000, c. Rental of the premises of a near-by School which has bigger space for reception after the programme; US$2,000, d. Catering - caterer to provide food and drinks for the programme; US$1,000; and. In terms of donor funding, in the current world that we are in, every penny of the donor must be accounted for. Condition of Use NHIL is at a flat rate of 2.5%; GETFund is at a flat rate of 2.5%. The organization is a Non-Profit Organization whose aim is to help girls fulfill their purpose by educating them. 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. v.From the facts, the aggregate cost incurred by the pastor in buying the vehicle, house and shares is US$600,000 [500k+100k]. Please feel free to contact us for your Customs classifications and validation, Copyright Notice According to the most recent estimates from the International Centre for Tax and Development, total tax revenues account for more than 80% of total government revenue in about half of the countries in the world - and more than 50% in almost every country. g.Investigation of non-compliance with charity rules; h.Establishment of charity courts; and, i. As was said by Ms Sophia Akuffo, JSC (as she then was), in the case of Atta Barfour v Tema Development Corporation, it is a basic principle that equity aids the vigilant and not the indolent. Therefore, where the Ghana Revenue Authority continues to sit and watch, and fail to enforce the law, it cannot put blame on the religious fraternity. Are religious organisations required to pay taxes and/or comply with the tax laws of Ghana? any function other than operating as a religious institution; and, iii. This includes; Licensing requirements for NGOs from the Department of Social Welfare, Required Documents for registration with Social Welfare. The renovation is considered as works. 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. The headquarter of this NGO is in Accra, Ghana. My contribution is directed towards the Commissioner-General (CG) and his officials, the Government of Ghana, Tax Professionals and Students, and the Academia in our attempt to educate the religious fraternity, and the general public, in particular, the ordinary man in madina trotro. Copyright 2016, All Rights Reserved. The CG is, therefore, an administrative officer within the meaning of Article 23 of the Constitution, 1992. Youth World Travel Organization (YWTO) is situated in Ghana. 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. 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. The highest income tax rate payable by an individual resident in Ghana is 25%. Failure to withhold taxes is an infringement of the law which exposes the organisation to penalties and interest surcharges. One of the most consistently challenging aspects of contracting in Namibia is complying with the country's tax system. These . The NGOs which cannot generate their own income are completely depends on funders to pay their employer cost. Tax In Namibia. In Ghana, tax is deducted from an employees personal income at source through a pay-as-you-earn scheme. 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 writer is a Chartered Tax Practitioner, a Chartered Accountant, a Postgraduate of University of East London, a Graduate of University of Ghana (Business School) and a Student of Law. 2010 PAYE contributions are withholdings from salaries of employees to satisfy their income tax responsibilities. In practice, these may include. Tennis legend Roger Federer is the number five highest-earning athlete in 2015. 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. Anonymous donation received by a trust established wholly for religious and charitable purpose on. They establish rules governing matters including, d.Trustees and board roles people and skills. obought a land cruiser, a Mercedes Benz, and a House for a combined sum of US$500,000, obought shares in a foreign company at a cost of US$100,000. TaxTim says: 3 April 2017 at 12:18 They are required to pay employees tax if their employees earn more than R6350 per month. Initially it was exactly the scenario but with increase in unscrupulous practices these NGOs were made liable to pay tax and also allowed exemption. 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. The evidence is scanty. This legal status makes it easier for NGOs to operate, as they are not required to pay tax on the funding they receive from government bodies, donors, and other sources. Procedures for registering a company limited by guarantee (Not-for-profit / NGO). This is the law on taxation of income currently in force. 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. 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. Article 41(j) of the Constitution, 1992 requires every citizen of Ghana to declare his income honestly to the appropriate and lawful agencies and to satisfy all tax obligations. When expanded it provides a list of search options that will switch the search inputs to match the current selection. 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. iv. GA South Municipal Assembly P. O. A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. Nice Article. 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