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Investment & Legal Framework
Withholding Tax
All companies are obliged to withhold tax from spe-
cific payments to other persons or corporate bodies.
The Withholding Tax include contract payments in
excess of GH¢50 at a rate of 5% to resident divi-
dends, at a rate of 8% to both residents and non-
residents, management and technical service fees at
a rate of 15%, royalties at a rate of 10% and interest
at a rate of 8% to all non-residents.
Capital Gains Tax
Capital gains tax of 5% is payable on gains ac-
crued in or derived from the realisation (disposal) of
chargeable assets in Ghana. This includes business
and business assets, buildings, lands, rights or inter-
ests in stocks or shares, or other assets declared as
taxable for capital gains tax purposes. Gains from
agricultural land and securities of companies listed
on the Ghana Stock Exchange are taxable. Exemp-
tions from capital gain tax include:
• Gains with a scrap value of GH¢50.
• Gains derived by a company out of a merger,
amalgamation or re-organisation where there is
continuity of underlying ownership in the asset of at
least 25%.
• Gains resulting from transfers of ownership of as-
set to close relatives or to former spouses as
part of a divorce settlement or separation agree-
ment.
• Gains used to acquire asset of the same nature
within one year.
Value Added Tax
The Value Added Tax Service (VAT Service) is re-
sponsible for the collection of VAT and National In-
surance Levy (NHIL). However, the Customs, Excise
and Preventive Service (CEPS), collects them on
behalf of the VAT Service on imported goods.
AVAT rate of 12.5% and NHIL rate of 2.5% is charge-
able on all transactions that result in the production
of goods or provision of services. The total rate of
15% is applied to the selling price or import value.
No VAT is charged on exported goods or services.
Companies obliged to pay VAT and exporters must
register with the VAT Service. VAT paid by registered
businesses on their purchases and expenses can be
reclaimed. The actual amount of VAT to be paid to
the VAT Service is computed by deducting the VAT
paid on own purchases and expenses from VAT
charged on sales and services. Registered com-
panies are obliged to file a tax return and pay VAT
every month. Goods and services exempted from
VAT are:
• Food produced in Ghana and brought in
its raw state
• Petrol, diesel and kerosene
• Equipment for agriculture and fishing
• Housing (ownership and rental)
• Transport fares
• Financial services
Free Zone Export
In line with government’s vision to boost economic
growth through the private sector, it set up the Free
Zones Programme in 1996 to promote processing
and manufacturing of goods through the establish-
ment of Export Processing Zones (EPZs). Two ex-
port processing zones (one in Tema near Accra and
the other in Sekondi near Takoradi, the capital of
the Western Region) has been established by the
government of Ghana. A third one in Boankra near
the Ashanti Region is being developed. The Ghana
Free Zones Board (GFZB) was established under
the Free Zone Act 504 (1995), to promote, facilitate,
monitor and regulate investments under the pro-
gramme.
Every company can apply for a status of a single
free zone company, provided it sells thirty percent of
its products to the local market and exports seventy
percent.
Incentives
Companies in the Free Zone are totally exempted
from payment of direct and indirect duties and levies
on all imports for production and exports from free
zones. There is also an exemption of income tax for
the first ten years of operation and thereafter income
tax rate is capped at eight percent. Furthermore,
they are not required to obtain import licenses and
are totally exempted from payment of withholding
taxes from dividends and are relieved from double
taxation for foreign investors and employees.
Import and Export Rules
Exports
Procedures and requirements for exporting goods
from Ghana depends on the kind of goods exported.
Exports are categorised into traditional and non- tra-