How The New Tax Amendments Affect Your Business As An Entrepreneur
Many small businesses and entrepreneurs shy away from taxation and its related issues but that should not be the case. Taxes affect businesses in many ways with the most obvious one being the effect on the businesses’ profit.
In this post and others to follow, I will explain how the recent tax amendments in Ghana affects small businesses and how they can take advantage of the incentives and reliefs stipulated in the amendments.
The highlight of these new tax laws and amendments are to help businesses especially SMEs understand what they stand to benefit as they operate in Ghana. Below are a few areas that will be of interest to most SMEs:
- PAYROLL:
Income tax (amendment)(№2) Act,2017(Act 956)
This amendment affects how you calculate the Pay-As-You-Earn (PAYE) for your employees. The change is to help make the income tax charge progressive so that those within the high income earning bracket, pay more than those within the lower bracket. What this means is that, your employees who earn low amounts would have low PAYE tax to pay.
The new graduated table is shown below:
ANNUAL RATES
MONTHLY RATES
2. TAX INCENTIVE FOR ENTREPRENEURS BELOW 35 YEARS
The amendment also grants tax holidays to entrepreneurs who are 35 years or below and operate businesses within the following industries:
- Manufacturing
- Information and communication
- Technology
- Agro processing
- Energy production
- Waste processing
- Tourism and creative arts
- Horticulture and medicinal
Qualifying Entrepreneurs will enjoy tax holiday on the income from their business for a period of five years. Then after the 5 years, qualifying entrepreneurs would enjoy reduced tax rates after the holidays for the next five years depending on the business location. Below are the locations and their corresponding tax rates:
Any entrepreneur interested in this incentive needs to apply to the Commissioner for it.
3. TAX AMNESTY
Tax Amnesty is an opportunity given to a specific group of tax defaulters to pay a specific amount or to apply for forgiveness of due dates within a specific period of time.
With the Tax amnesty Act, 2017 (Act 995), there is an avenue for waiver of taxes and/ or penalties and interest for two categories of taxpayers; registered and unregistered tax persons.
- For unregistered persons, registration and filling for the years 2014,2015 and 2016 under the tax amnesty regime will qualify for a waiver of all outstanding taxes, penalties and interests due prior to 2014 year of assessment. Filling of 2017 returns before the expiration of the amnesty period would qualify for waiver of interest and penalty.
- For registered persons, they will be eligible for waiver for penalties and interests due from prior years unfiled returns or undisclosed tax liabilities. They will be required to file the income tax return or amended return up to the 2017 year of assessment and also, pay the outstanding taxes.
Businesses interested in obtaining the amnesty are required to apply to the Commissioner before or on 30th September, 2018.
For further enquiries on how these amendments affect your business, contact me via mary-anne@builtgh.com or call our hotline 0303974832.
Source: GRA website, Deloitte Tax Update, Jan 2018
