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INTERNAL REVENUE REGULATIONS, 2001 (LI 1675)

 

 

ARRANGEMENT OF REGULATIONS

PART I—CALCULATION OF INCOME

Division 1: Chargeable Income

Regulation  

1. Calculation of Chargeable Income

Division II: Deductions

2. Contributions to Charities

3. Scholarships

4. Donations for Rural and Urban Development

5. Donations for Sports Development and Promotion

6. Donations to Government for Worthwhile Causes

7. Bad Debts of Banks

8. Capitalization of Foreign Exchange Losses

9. Deductions not Allowed

10. Treatment of Losses

Division III: Tax Accounting

11. Generally Accepted Accounting Principles

12. Long-term Contracts

13. Trading Stock

14. Consumable Stores

Division IV: Miscellaneous Rules

15. Leases

16. Rent Income from Residential and Commercial Premises

17. Personal Reliefs and Reductions

PART II—EXEMPTIONS

18. Extension of Bond Interest Exemption

19. Diplomatic Officers

20. Government Contract Officers

PART III—INSURANCE

21. Reserve for Unexpired Risks

22. Income from Life Insurance Business to be Calculated Separately

PART IV—INTERNATIONAL MATTERS

23. Treatment of Foreign Outgoings, Expenses, and Losses

24. Repatriated Profits of a Permanent Establishment in Ghana

PART V—PAYMENT OF TAX

Division I—Tax Instalments

25. Tax Instalments Payable by Members of Certain Associations

Division II—Withholding of Tax from Income from Employment

26. Employers Required to Withhold Tax

27. Amount to be Withheld by Employers Generally

28. Amount to be Withheld by Employers from Overtime and Bonuses

29. Qualifying Cash Payment

30. Employee's Employment Tax Liability

31. Primary Employment

32. Tax Reliefs and Tax Reliefs Cards

33. Substantiated Retirement Contributions

34. Consecutive Primary Employment

35. Returns by Employer

36. Deemed Employee Assessments

37. Returns of Income of Individual with Two or More Employments

38. Definitions

Division III—Withholding of Tax from Other Amounts

39. Payment to Residents for Goods and Services

40. Payment to Non-residents for Goods and Services

41. Premiums Paid to Non-resident Insurers

PART VI—ADMINISTRATION

42. Service of Documents Electronically

PART VII—DISPUTE RESOLUTION

43. Proceedings Relating To Tax Assessment

44. Registration on Commencement and Notification on Cessation of Business

PART IX—INTEREST, PENALTIES, AND OFFENCES

45. Interest, Penalty, and Offence Provisions in Act to Apply

PART X—INTERPRETATION

46. Interpretation

PART XI—TRANSITIONAL PROVISIONS AND COMMENCEMENT

47. Capital Allowances

48. Self-assessment

49. Withholding of Tax from Income from Employment

50. Commencement

SCHEDULES

 

IN exercise of the powers conferred on the Minister responsible for Finance by section 114 of the Internal Revenue Act, 2000 (Act 592), these Regulations are made this 8th day of June, 2001.

PART I—CALCULATION OF INCOME

Division I: Chargeable Income

Regulation 1—Calculation of Chargeable Income

Subject to the Act, the chargeable income of a person for a year of assessment shall be calculated in accordance with the steps set out in Schedule One to these Regulations.

Division II: Deductions

Regulation 2—Contributions to Charities

Any contribution made by a person during a year of assessment to a charitable institution or fund approved by the Government may be deducted in calculating the person's chargeable income for the year.

Regulation 3—Scholarships

Any amount expended by any company or body of persons during a year of assessment under a scheme of scholarship approved by the Government for a technical, professional or other course of study may be deducted in calculating the chargeable income of that company or body of persons for the year.

Regulation 4—Donations for Rural and Urban Development

Any donation made by a person during a year of assessment for the purpose of development of any rural or urban area and approved by the Government may be deducted in calculating the person's chargeable income for the year.

Regulation 5—Donations for Sports Development and Promotion

Any donation made by a person during a year of assessment for the purpose of sports development or sports promotion and approved by the Government may be deducted in calculating the person's chargeable income for the year.

Regulation 6—Donations to Government for Worthwhile Causes

Any donation made by a person during a year of assessment to the government for worthwhile government causes approved by the Commissioner may be deducted in calculating the person's chargeable income for the year.

Regulation 7—Bad Debts of Banks

For the purposes of section 18 of the Act, a debt claim of a bank regulated under the Banking Law, 1989 (P.N.D.C.L. 225) is considered a bad debt where the debt is written off in accordance with the standards of the Bank of Ghana.

Regulation 8—Capitalisation of Foreign Exchange Losses

(1) A foreign exchange loss of a capital nature referred to in subsection (2) of section 21 of the Act may only be capitalised and capital allowances granted to a person where the loss is incurred by the person in the production of income from a business.

 

(2) A foreign exchange loss that meets the requirements of sub-regulation (1), shall, together with any other such losses, be placed in a pool separate from assets of the business and depreciated in accordance with paragraph 3 of the Third Schedule of the Act.

(3) The depreciation rate applicable to a pool of capitalised foreign exchange losses referred to in sub-regulation (2) is 10%.

(4) Any capital allowances granted with respect to a pool of capitalised foreign exchange losses referred to in sub-regulation (2) may only be deducted in calculating income from the business referred to in sub-regulation (1).

Regulation 9—Deductions not Allowed

(1) Paragraph (a) of subsection (1) of section 23 of the Act shall not restrict a deduction otherwise available under section 39, 57, or 60 of the Act or under regulation 2, 3, 4, 5, or 6 of these Regulations.

(2) Paragraph (b) of subsection (1) of section 23 of the Act shall not restrict a deduction otherwise available under section 16, 17, 19, 20, 22, 39, 57 or 60 of the Act or under regulation 2, 3, 4, 5, or 6 of these Regulations.

(3) Paragraph (e) of subsection (1) of section 23 of the Act shall not restrict a deduction otherwise available under section 20 of the Act.

Regulation 10—Treatment of Losses

(1) In deducting a loss from any income in respect of any basis period losses incurred from a business and an investment shall be treated separately.

(2) A loss incurred from a business shall not be set off against or deducted from an income from an investment and a loss incurred from an investment shall not be set off against or deducted from an income from a business.

(3) No deduction shall be made under subsection (1) of Section 22 of the Act unless a claim in respect of the loss is made to the Commissioner in writing within twelve months after the end of the basis period in which the loss was incurred.

Division III: Tax Accounting

Regulation 11—Generally Accepted Accounting Principles

For the purposes of the Act and, in particular, section 25, “generally accepted accounting principles” means those adopted by the Institute of Chartered Accountants (Ghana) from time to time.

Regulation 12—Long-term Contracts

Where there is a change in ownership of an entity of the type referred to in section 54 of the Act and after the change, the entity incurs a loss which is attributable to a long-term contract, the loss may not be carried back under subsection (3) of section 30 of the Act to a basis period commencing before the change.

Regulation 13—Trading Stock

(1) For the purposes of section 31 of the Act, the closing value of trading stock for a basis period shall not exceed the opening value of the trading stock for the period plus the cost of trading stock acquired during the period.

(2) No deduction is separately available for any cost, expense or amount that forms part of the cost of trading stock.

Regulation 14—Consumable Stores

(1) For the purposes of ascertaining the income of a person for a basis period from any business, but subject to sub-regulation (2) of regulation 13, the cost of consumable stores of the business may be deducted only where the stores are not on hand at the end of the period.

(2) The cost of consumable stores that are not on hand at the end of a basis period shall be determined in the same manner as the cost of trading stock disposed of during a basis period referred to in section 31 of the Act and regulation 13.

Division IV: Miscellaneous Rules

Regulation 15—Leases

(1) Capital allowances shall not be granted to the lessee of an asset, whether the asset is leased under an operating or finance lease, but, where the asset is used in the production of income from a business or investment, a deduction may be available for lease rent incurred under the lease.

(2) A lessor who leases an asset under an operating lease

(a) may, by reason of subparagraph (2) of paragraph 2 of the Third Schedule of the Act, be granted capital allowances with respect to the asset; and

(b) shall include the whole amount of rent paid under the lease in calculating the lessor's income.

(3) A lessor who leases an asset under a finance lease

(a) is not entitled to capital allowances in respect of the asset; but

(b) may reduce the amount of rent included in calculating the lessor's income by a capital amount determined in accordance with guidelines issued by the Commissioner.

(4) The capital amount determined under paragraph (b) of sub-regulation (3) shall not exceed the actual cost of the asset at the end of the lease term.

(5) If in respect of any particular basis period the capital amount determined under paragraph (b) of sub-regulation (3) is not deducted in calculating the lessor's income that amount shall not be carried forward.

Regulation 16—Rent Income from Residential and Commercial Premises

(1) Where an individual receives rent income from any residential or commercial premises the Commissioner may calculate tax on the rent income separately at a flat rate of 10% on the gross rent income in a year of assessment.

(2) The amount computed under sub-regulation (1) shall be paid by that person to the Commissioner as a final tax and accordingly that rent income shall not be included in ascertaining that individual’s income.

(3) Where sub-regulation (2) applies, the individual shall not be entitled to any deduction under Division III of Part III of Chapter I of the Act.

(4) Where a person other than an individual receives rent income which is not a business income in any year of assessment that person shall pay tax at the rate of 10% on the gross rent income and the provisions of sub-regulations (2) and (3) shall apply to that income.

Regulation 17—Personal Reliefs and Reductions

(1) Unless extended by way of double taxation arrangement, non-resident persons are not entitled to

(a) personal reliefs under section 39 of the Act;

(b) a reduction for life insurance premiums under section 57 of the Act; or

(c) a reduction for contributions to the Social Security Pension Scheme under section 60 of the Act.

(2) Personal reliefs available under paragraph (f) of subsection (1) of section 39 of the Act shall not exceed the lesser of the cost referred to in that paragraph and fifty currency points.

PART II—EXEMPTIONS

Regulation 18—Extension of Bond Interest Exemption

Interest paid to a non-resident person on bonds issued by the government of Ghana is exempt from tax.

Regulation 19—Diplomatic Officers

(1) Subject to sub-regulation (2), members of the Ministry of Foreign Affairs and officers attached to official Ghanaian diplomatic or consular missions abroad are exempt from income tax in respect of cost-of-living allowances for services rendered outside Ghana.

(2) Training allowances paid in lieu of salary are not exempt by reason of sub-regulation (1)

Regulation 20—Government Contract Officers

(1) Individuals who are not citizens of Ghana and whom the Government employs on a temporary basis are exempt from income tax with respect to any income from the employment which is

(a) expressed to be exempt from income tax under the terms of the employment contract, and

(b) paid by the Government out of the Consolidated Fund.

(2) Any income of an individual described in sub-regulation (1) that is not covered by an exemption under that sub-regulation shall be taxed in accordance with the Act.

PART III—INSURANCE

Regulation 21—Reserve for Unexpired Risks

For the purposes of paragraph (c) of subsection (3) of section 56 of the Act, “reserve for unexpired risks” means the reserve required to be maintained by the insurer under section 23 of the Insurance Law, 1989 (P.N.D.C.L. 227).

Regulation 22—Income from Life Insurance Business to be Calculated Separately

(1) A person's activities in conducting a life insurance business are treated as a business separate from any other activity of the person and the person’s income or loss from the business for any year of assessment shall be calculated separately.

(2) Where a person conducting a life insurance business derives amounts that but for subsection (2) of section 58 would be included in calculating income from the life insurance business

(a) the person's activities in deriving those amounts are treated as a business separate from the life insurance business; and

(b) those amounts shall be included in calculating the person's income from that separate business.

PART IV—INTERNATIONAL MATTERS

Regulation 23—Treatment of Foreign Outgoings, Expenses, and Losses

(1) Any outgoing, expense, or loss incurred by a person, to the extent that it is not incurred in the production of income accruing in or derived from Ghana

(a) shall not be deducted in calculating income accruing in or derived from Ghana; but

(b) may, if deductible under the Act, be deducted only in calculating income accruing or derived from outside Ghana.

(2) In accordance with section 64 of the Act and sub-regulation (1), a person shall calculate

(a) any income of the person from a business or investment that is not accrued in or derived from Ghana; or

(b) any loss of the person from a business or investment that is not incurred in Ghana,

separately from any income or loss of the person from that business or investment accruing in, derived from or incurred in Ghana, as the case requires, and a loss from one calculation shall not be set against income from the other calculation.

Regulation 24—Repatriated Profits of a Permanent Establishment in Ghana

(1) For the purposes of section 66 of the Act, the repatriated profits for a basis period of a permanent establishment of a non-resident person in Ghana shall be calculated in accordance with this regulation.

(2) For the purposes of calculating the repatriated profits of a permanent establishment in Ghana, the non-resident person shall maintain in Ghana an accumulated profits account which, at the end of each basis period of the person, shall be

(a) credited with the net profits; and

(c) debited with the repatriated profits,

of the permanent establishment for the period.

(3) Subject to sub-regulation (4), the repatriated profits of a permanent establishment for a basis period are calculated according to the following formula—

A + B - C

where

A   is the total balance sheet value of assets, net of liabilities, of the permanent establishment at the commencement of the period;

B    is the net profit of the permanent establishment for the period or, where the permanent establishment has a net loss for the period, that loss expressed in a negative amount; and

C  is the total balance sheet value of assets, net of liabilities, of the permanent establishment at the end of the period.

(4) The repatriated profits of a permanent establishment for a basis period shall not exceed the sum of

(a) the net profit of the permanent establishment for the year; and

(b) the balance of the permanent establishment's accumulated profits account at the end of the previous basis period after the adjustments referred to in sub-regulation (2).

(5) For the purposes of this regulation

(a) the net profit of a permanent establishment for a basis period is such profit as reduced by the tax payable on the chargeable income of the non-resident person relating to activities of the permanent establishment for the period;

(b) the total balance sheet value of assets of a permanent establishment and the net profit or loss of a permanent establishment shall be calculated in accordance with the accounting principles adopted by the Institute of Chartered Accountants (Ghana) from time to time; and

(c) the total balance sheet value of assets at the commencement of a basis period equals the total balance sheet value of assets at the end of the previous basis period.

(6) Subject to section 111 of the Act, the tax imposed on a non-resident person under section 66 of the Act is in addition to any other tax imposed on that person.

PART V—PAYMENT OF TAX

Division I: Tax Instalments

Regulation 25—Tax Instalments Payable by Members of Certain Associations

(1) This regulation applies to the associations, occupational groups, and classes of persons mentioned in the table in paragraph 1 of Schedule Two to these Regulations.

(2) An association or occupational group identified in the table in paragraph 1 of Schedule Two shall collect tax from the class of persons identified in that table and those persons shall pay the tax in accordance with that Schedule.

(3) Tax collected by an association or occupational group under sub-regulation (2) shall be paid to the Commissioner not later than the end of the week following the week in which it is collected from the person.

(4) In accordance with the definition of “tax” in section 167 of the Act, tax collected from a person by an association or occupational group under sub-regulation (2), in addition to being tax paid by the person, is treated as tax payable by the association or occupational group on behalf of the person and is due at the time referred to in sub-regulation (3).

(5) Any tax collected from a person under this regulation does not relieve the person from the obligation to file a return of income under section 72 of the Act but shall be credited against tax assessed to the person in accordance with subsection (9) of section 80 of the Act.

(6) Subject to sub-regulation (7) a person who pays tax to an association or occupational group in accordance with this regulation is not required to pay tax by quarterly instalments under subsection (1) of section 80 of the Act.

(7) Where the Commissioner is of the opinion at any time that a person who belongs to any class of persons identified in Schedule Two should come within the provisions of subsection (1) of Section 80 of the Act, the Commissioner may direct in writing that that person shall not pay tax in accordance with this regulation and section 76 of the Act shall apply

(8) The principal officers of any association or occupational group which collects tax from any class of persons identified in the Schedule shall be jointly and severally liable for the proper accounting of any money collected by virtue of these Regulations.

(9) Notwithstanding sub-regulation (8) any person who belongs to any class of persons identified in Schedule Two who fails or refuses to pay due date tax specified in that Schedule shall be treated as having failed to pay the tax on due date and Regulation 45 shall apply to that person in addition to any other enforcement provision of the Act.

Division II: Withholding of Tax From Income from Employment

Regulation 26—Employers Required to Withhold Tax

(1) An employer shall withhold sufficient tax from qualifying cash payments made to an employee during a year of assessment to meet the employee’s employment tax liability for the year in accordance with this Division.

(2) Only the following employers are required to withhold tax in accordance with section 81 of the Act and this Division—

(a) resident employers; and

(b) non-resident employers with a permanent establishment in Ghana.

(3) For the purposes of the Act and this Division,

(a) any non-resident public entertainer including a stage, motion picture, or radio artist, musician, athlete, or boxer who performs services in Ghana is treated as an employee;

(b) any person who makes payment for those services to the entertainer or an associate of the entertainer is treated as the entertainer’s employer;

(c) the payment is treated as made to the entertainer in respect of the employment; and

(d) that payment is subject to withholding tax under section 81 of the Act and this Division and at the rate mentioned in paragraph 2 of Part I of the First Schedule of the Act.

(4) An employer shall deduct tax at the appropriate rate from the qualifying cash payments payable to an employee at the date the employee leaves the employment.

Regulation 27—Amount to be Withheld by Employers Generally

(1) Subject to regulation 28, where an employer makes a qualifying cash payment to an employee during a year of assessment, the employer shall withhold an amount from the payment calculated in accordance with the following formula—

A x B

C

where

A    is the amount of the payment;

B   is the employee's employment tax liability for the year estimated under sub-regulation (2) less tax withheld under this sub-regulation by the employer from prior qualifying cash payments made by the employer to the employee during the year; and

C    is the total of the payment referred to in A and qualifying cash payments still to be made by the employer to the employee during the year estimated under sub-regulation (2).

(2) For the purposes of making a calculation under sub-regulation (1), an employer shall, at the time of making a qualifying cash payment to an employee

(a) make a reasonable estimate of

(i) the employee’s employment tax liability for the year of assessment during which the payment is made; and

(ii) the amount of qualifying cash payments still to be made by the employer to the employee during the year; or

(b) where an estimate has been made under paragraph (a) for the year of assessment in which the payment is made, consider whether that estimate is still accurate and, if not, make a new estimate under paragraph (a).

(3) In making an estimate under sub-regulation (2), an employer shall not take into account

(a) any tax reliefs of the employee unless the employee has provided the employer with a tax reliefs card in accordance with sub-regulation (2) of regulation 32 prior to the estimate; or

(b) any life insurance premiums mentioned in paragraph (a) of sub-regulation (1) of regulation 33 unless the employee has provided the employer with a copy of the receipt as mentioned in that paragraph prior to the estimate.

(4) On application in writing, the Commissioner may adjust the amount to be withheld under sub-regulation (1) where the employee’s qualifying employment income will include an amount that does not have a source in Ghana.

Regulation 28—Amount to be withheld by Employers from Overtime and Bonus

(1) Where

(a) an employer makes a qualifying cash payment during a year of assessment to a qualifying junior employee for overtime work by the employee; and

(b) the sum of the payment and other payments for overtime made by the employer to the employee previously during the year does not exceed 50% of the employee’s qualifying employment income from the employment for the year,

the employer shall withhold tax from the payment at the rate of

(i) in the case where the employee earns not more than 5.2 currency points per month from the employment in respect of overtime, 2.5% of the gross amount of the payment; and

(ii) in the case where the employee earns more than 5.2 currency points per months from the employment in respect of overtime, 10% of the gross amount of the payment.

(2) Where

(a) an employer pays a bonus to an employee during a year of assessment;

(b) the payment is a qualifying cash payment; and

(c) the sum of the payment and other bonuses paid by the employer to the employee previously during the year does not exceed the lesser of

(i) 15% of the employee's qualify in employment income from the employment for the year; or

(ii) 720 currency points,

the employer shall withhold tax from the gross amount of the payment at the rate of 5%.

(3) Tax withheld under sub-regulation (1) or (2) is a final tax on the overtime or bonus payment and

(a) the payment shall not be included in calculating the employee’s income from the employment; and

(b) the tax paid by withholding satisfies the employee’s tax liability with respect to the payment and may not be reduced by any tax credits allowed to the employee under the Act.

(4) Where an employer makes a payment to an employee for overtime or as a bonus and the employer is not required to withhold tax from the payment under sub-regulation (1) or (2),

(a) the payment shall be included in calculating the employee’s income from the employment; and

(b) the employer shall withhold tax from the payment in accordance with the provisions of this Division.

(5) For the purposes of this regulation, an employee is a “qualifying junior employee” for a year of assessment if the employee is a junior staff member whose qualifying employment income from the employment for the year does not exceed 6000 currency points.

Regulation 29—Qualifying Cash Payment

(1) A qualifying cash payment is a payment

(a) made by an employer to an employee or on behalf of an employee that is required to be included in the employee's qualifying employment income for a year of assessment, and

(b) that is made (in whatever currency) in cash, by cheque or other bill of exchange drawn on a financial institution or that otherwise involves a debit to an account of the employer held with a financial institution.

(2) Where the amounts required to be withheld by an employer under regulation 27 are not sufficient to meet an employee’s employment tax liability for a year of assessment, including by reason of in-kind payments, the employer shall pay tax in an amount equal to the insufficiency.

(3) Any tax payable by an employer under sub-regulation (2),

(a) shall be paid

(i) within fifteen days after the end of the year of assessment, and

(ii) in the same manner as provided for by section 87 of the Act for tax withheld from qualifying cash payments to an employee;

(b) shall be treated as paid by the employee for the purposes of calculating the employee's tax liability for the year but shall not be included in calculating the employee's income;

(c) shall not be deducted in calculating the income of the employer; and

(d) shall not be recoverable by the employer from the employee.

Regulation 30—Employee's Employment Tax Liability

(1) Subject to sub-regulation (2), an employee’s employment tax liability for a year of assessment is calculated

(a) in the case of a primary employment of the employee, by applying the appropriate rates in Part I of the First Schedule of the Act to the excess of the following—

(i) the employee's qualifying employment income from the employment for the year; less

(ii) the employee's tax reliefs and substantiated retirement contributions for the year; and

(b) in the case of a secondary employment of the employee, by applying to the employee's qualifying employment income from the employment for the year,

(i) where the employee is a resident individual, the highest rate mentioned in paragraph 1 of Part I of the First Schedule of the Act; and

(ii) where the employee is a non-resident individual, the rate mentioned in paragraph 2 of Part I of the First Schedule of the Act.

(2) Where

(a) an employer is required to withhold tax in accordance with regulation 27 at the rate mentioned in subparagraph (i) of paragraph (b) of sub-regulation (1) from qualifying cash payments made to an employee during a year of assessment; and

(b) withholding at that rate would cause hardship for the employee by reason that none of the employee's chargeable income for the year is likely to be taxed at that rate,

the Commissioner may, on application from the employee, reduce the rate at which the secondary employer must withhold tax in accordance with sub-regulation (3).

(3) Where an employee applies to the Commissioner for a reduction of tax rate by reason of hardship under sub-regulation (2) the Commissioner shall apply the following rates

(a) where the income from the secondary employment does not exceed ¢2,400,000 per annum at a flat rate of 15%.

(b) where the income from the secondary employment exceeds ¢2,400,000 but does not exceed ¢5,400,000 per annum at a flat rate of 20% and

(c) where the income from the secondary employment exceeds ¢5,400,000 per annum at a flat rate of 30%.

(4) For purposes of these Regulations a person will be said to suffer a hardship under sub-regulation (2) where the tax payable on the aggregate income from that person’s primary and secondary employment in the year of assessment is 50% higher than that which that person would otherwise be liable to pay in respect of that income under the provision of Section 1(2) of the Act.

Regulation 31—Primary Employment

(1) The primary employment of an employee for a year of assessment is the employment with respect to which the employee has provided an employer with a declaration under sub-regulation (2) that relates to the year.

(2) For the purposes of sub-regulation (1), an employee may furnish an employer with a declaration nominating the employment as the employee’s primary employment and the declaration

(a) shall be in the form prescribed by the Commissioner and may be incorporated in the form for the tax reliefs card;

(b) shall be signed and dated by the employee and the employer; and

(c) may relate to one or more years of assessment.

(3) An employee shall not have more than one primary employment at any one time.

(4) An employee may withdraw a nomination made under regulation (2)[sic] only at the end of a year of assessment.

(5) Where an employee has a primary employment that ceases during a year of assessment and, after that cessation, provides a different employer with the employee’s tax reliefs card current for the year and filled out in accordance with regulation 34, the different employer becomes the employee’s primary employer.

Regulation 32—Tax Reliefs and Tax Reliefs Cards

(1) On application by an employee on a prescribed form in accordance with such procedure as the Commissioner may determine, the Commissioner may issue the employee with a tax reliefs card certifying the personal reliefs to which the employee is entitled under section 39 of the Act for one or more years of assessment.

(2) The tax reliefs of an employee for a year of assessment equal the amount certified on any tax reliefs card issued to the employee by the Commissioner under sub-regulation (1) that covers the year but only where the employee has provided the card to the employer of the employee’s primary employment.

Regulation 33—Substantiated Retirement Contributions

(1) Subject to the limit in sub-regulation (2), an employee’s substantiated retirement contributions for a year of assessment are life insurance premiums referred to in subsection (1) of section 57 of the Act and contributions made to the Social Security Pension Scheme referred to in subsections (3) and (4) of section 60 of the Act where

(a) the premium is paid during the year by the employee and the employee has provided the employer with a copy of the receipt for payment; or

(b) the premium or contribution is paid or to be paid during the year by the employer on the employee’s behalf.

(2) An employee’s substantiated retirement contributions for a year of assessment shall not exceed the limits referred to in subsection (2) of section 57 and subsection (5) of section 60 of the Act calculated as though the only income derived by the employee for the year is the qualifying employment income from the primary employment of the employee.

Regulation 34—Consecutive Primary Employment

(1) Where an employee's primary employment ceases during a year the employer shall insert the following information on the relevant part of the employee’s tax reliefs card,

(a) the amount of qualifying employment income derived by the employee from the employment for the year to the date the employment ceases;

(b) the amount of tax withheld, in accordance with section 81 of the Act and regulation 26 (but not regulation 28), from payments made by the employer to the employee with respect to the employment that are made during the year to the date the employment ceases; and

(c) such further information as the Commissioner may require.

(2) An employer required to insert information on a tax reliefs card under sub-regulation (1) shall insert the information and return the card to the employee by the time the employment ceases.

(3) Sub-regulation (4) applies where an employee

(a) ceases a primary employment during a year of assessment;

(b) provides the employee’s tax reliefs card, as adjusted under sub-regulation (1), to a different employer during the year; and

(c) nominates the employment with the different employer as the employee’s new  primary employment under regulation 31 effective during the year but after the prior primary employment has ceased.

(4) Where this sub-regulation applies, the new primary employer shall, for the purposes of calculating tax to be withheld under regulation 27 from qualifying cash payments to be made to the employee during the remainder of the year of assessment

(a) add to the qualifying employment income from the new primary employment for the year the qualifying employment income notified by the employee’s prior primary employer on the tax reliefs card; and

(b) add to tax considered to be withheld by the new primary employer during the year from qualifying cash payments to employee, the amount of tax notified by the employee’s prior primary employer as withheld on the tax reliefs card.

Regulation 35—Returns by Employer

Where an employer has been an employer with respect to a primary employment during a year of assessment, then, together with the return and information referred to in subsections (4) and (5) of section 81 of the Act required to be furnished for the year, the employer shall furnish

(a) the official number of any tax reliefs card provided to the employer by an employee with respect to the year; and

(b) the certificate of insurance relating to any employee’s life insurance for which receipts have been furnished to the employer under paragraph (a) of sub-regulation (1) of regulation 33.

Regulation 36—Deemed Employee Assessments

(1) For the purposes of subsection (7) of section 81 of the Act, an employee’s assessable income for a year of assessment is considered to consist exclusively of income from an employment only if all assessable income derived by the employee during the year consists of income from an employment which at the time the income is derived is the employee’s primary employment.

(2) The condition in sub-regulation (1) may be met where an employee has more than one employment during a year provided that at the time any amount to be included in calculating the employee's assessable income is derived from an employment, that employment is the employee's primary employment.

(3) An employee may qualify for the deemed assessment procedure under subsection (7) of section 81 of the Act despite receiving payments that are exempt from tax or that are subject to final tax under section 2 or 3 of the Act or regulation 28.

Regulation 37—Returns of Income of Individual with Two or More Employments

(1) Where

(a) an individual has two or more employments at any one time during a year of assessment;

(b) all of the individual’s employers are of the type referred to in sub-regulation (2) of regulation 26; and

(c) the individual has no assessable income from any business or investment for the year,

the individual is not obliged to, but may, lodge a return of income for the year under section 72 of the Act.

(2) Until such time as an individual referred to in sub-regulation (1) files a return of income, the individual’s tax liability for the year with respect to that individual's chargeable income is equal to

(a) the amounts required to be withheld from qualifying cash payments made to the individual during the year under regulation 27; plus

(b) any amount payable by an employer for the year in respect of the individual under sub-regulation (3) of regulation 29.

(3) An individual with two or more employments at any one time during a year of assessment that does not fall within sub-regulation (1) shall furnish a return of income for the year in accordance with section 72 of the Act.

Regulation 38—Definitions

In this Division,

“employee’s employment tax liability” has the meaning in regulation 30;

“primary employment” with respect to an employee means the employment with respect to which the employee has a declaration existing under regulation 31;

“qualifying cash payment” has the meaning in regulation 29;

“qualifying employment income” from an employment for a year of assessment is equal to the total of all amounts

(a) that are required to be included in ascertaining the income of the employee from the employment for the year; and

(b) that either have a source in Ghana or that are received by a resident individual during the year;

“secondary employment” with respect to an employee means any employment that is not the primary employment of the employee;

“substantiated retirement contributions” of an employee for a year of assessment has the meaning in regulation 33; and

“tax reliefs” and “tax reliefs card” of an employee for a year of assessment have the meanings in regulation 32.

Division III: Withholding of Tax from Other Amounts

Regulation 39—Payment to Residents for Goods and Services

The rate of withholding tax applicable to payments to a resident person for goods and services under Part IV, paragraph 3, sub-paragraph (c) of the First Schedule to the Act shall be 7.5%.

Regulation 40—Payment to Non-residents for Goods and Services

In exercising the power under subsection (2) of section 86 of the Act, the Commissioner may require the person to withhold tax, at the rate provided in Part VIII of the First Schedule of the Act, from part only of a payment.

Regulation 41—Premiums Paid to Non-Resident Insurers

(1) A person who

(a) in the course of conducting a business or investment, enters into a contract for short-term insurance with a non-resident person or a permanent establishment situated in Ghana of a non-resident person; and

(b) pays to the non-resident person or permanent establishment a premium with respect to the insurance that accrues in or is derived from Ghana,

shall withhold tax from the gross amount of the premium at the rate of 5%.

(2) The Act applies to tax withheld or required to be withheld under sub-regulation (1) as though the tax were withheld or required to be withheld under Subdivision B of Division III of Part X of Chapter I of the Act.

PART VI—ADMINISTRATION

Regulation 42—Service of Documents Electronically

(1) For the purposes of the Act, where a person has notified the Commissioner in writing of an electronic address for service of documents under the Act, including a facsimile number or electronic-mail address, a document to be served on the person by the Commissioner under the Act is considered sufficiently served if sent to the address.

(2) For the purposes of sub-regulation (1), a document is considered sent to an electronic address if the sender receives

(a) in the case of a message sent to a facsimile number, confirmation from the sending facsimile machine that the transmission is sent or okay; and

(b) in the case of a message sent to an electronic-mail address, confirmation from the server of the recipient that the message has been received.

PART VII—DISPUTE RESOLUTION

Regulation 43—Proceedings Relating to Tax Assessment

No person shall institute any proceedings relating to or any action in connection with any issue arising out of an assessment under the Act except through the objection and appeal procedure provided in Division II of Part III of Chapter IV of the Act.

PART VIII—REGISTRATION OF BUSINESS

Regulation 44—Registration on Commencement and Notification on Cessation of Business

(1) No person shall carry on any business unless that person has registered that business with the Commissioner on a prescribed form.

(2) Where any person in any year of assessment discontinues any business or changes the registered address of the business in which he has been engaged, he shall notify the Commissioner in writing within thirty days of the cessation or change of address of that business.

PART IX—INTEREST, PENALITIES, AND OFFENCES

Regulation 45—Interest, Penalty, and Offence Provisions in Act to Apply

The provisions of Subdivisions B, C, and D of Division III of Part III of Chapter IV of the Act apply to a person who fails to comply with these Regulations as though these Regulations were a part of the Act.

PART X—INTERPRETATION

Regulation 46—Interpretation

(1) In these Regulations, “the Act” means the Internal Revenue Act, 2000 (Act 592).

(2) Expressions used in these Regulations that are used in the Act have, unless the context otherwise requires, the same meaning in these Regulations as they have in the Act.

PART XI—TRANSITIONAL PROVISIONS AND COMMENCEMENT

Regulation 47—Capital Allowances

(1) For a person’s first basis period ending within the year of assessment 2001 (the “first basis period”), the Third Schedule of the Act shall be applied in accordance with the steps set out in Schedule Three to these Regulations.

(2) The residual value of a depreciable asset of a business of a person as at the end of the person’s last basis period ending within the year of assessment 2000 means,

(a) in the case of an asset with respect to which the person may have been granted capital allowances under the Third Schedule of the Income Tax Decree, 1975 (S.M.C.D. 5)

(i) the cost of the asset; less

(ii) any capital allowances granted or that may have been granted to the person in respect of the asset under the Third Schedule of the Income Tax Decree, 1975 (S.M.C.D. 5) assuming the person claimed the allowances and was taxable with respect to the income of the business; and

(b) in the case of any other asset

(i) the cost of the asset; less

(ii) any capital allowances that may have been granted to the person in respect of the asset prior to the year of assessment 2001 under the Third Schedule of the Act assuming

(A) the Act as passed was in force during the year of assessment in which the asset was acquired;

(B) the asset was placed in a pool of depreciable assets by itself; and

(C) the person claimed the allowances and was taxable with respect to the income of the business.

(3) A person shall not be granted any capital allowances with respect to a foreign exchange loss of a capital nature referred to in subsection (2) of section 21 of the Act that was incurred prior to the Act coming into force.

Regulation 48—Self-assessment

For the purposes of subsection (3) of section 78 of the Act, the Commissioner may permit an estimate under subsection (2) of that section to be furnished by a person at any time prior to the date by which the person must pay the first instalment under section 80 of the Act.

Regulation 49—Withholding of Tax from Income from Employment

(1) Withholding obligations under Division II of Part V of these Regulations come into effect on the date these Regulations come into force.

(2) Notwithstanding sub-regulation (1), after these Regulations come into force employers may, at their choice and without penalty but only until otherwise notified by the Commissioner, withhold tax from payments to employees under

(a) Division II of Part V of these Regulations; or

(b) the arrangements existing before the commencement of the Act and these Regulations.

Regulation 50—Commencement

These Regulations shall come into force on 1st July, 2001.

SCHEDULES

SCHEDULE ONE

Regulation 1

Step 1             Identify each of the person’s businesses, employments, and investments conducted during any basis period ending within the year.

Step 2             Calculate separately for each business, employment, and investment identified, the income of the person from that business, employment, or investment for each basis period ending within the year.

Step 3             To calculate the income of the person from a business, employment, or investment, work out according to ordinary accounting rules the gains or profits from that business, employment, or investment, as the case requires.

Step 4             Adjust the gains or profits worked out to ensure that all amounts required to be included by sections 7, 8, and 9 of the Act, as the case requires, are included in the calculation but exclude any payment subject to final tax under section 2 or 3 of the Act or regulation 28 of these Regulations.

Step 5             Adjust the gains or profits worked out to ensure that any amount deducted in the calculation is only deducted in accordance with Division III of Part III of Chapter I of the Act but do not deduct any amount that relates to a payment subject to final tax under section 2 or 3 of the Act.

Step 6             The gains or profits of the person from the business, employment, or investment as worked out under Step 3 and adjusted under Step 4 and Step 5 is the income of the person from that business, employment, or investment, as the case requires.

Step 7             Determine whether the income from any such business, employment, or investment has the necessary connection with Ghana as provided for by section 6 of the Act and whether the income is exempt income.

Step 8             Any income from a business, employment, or investment for a basis period ending within the year that has the necessary connection with Ghana and that is not exempt income is the assessable income of the person from the business, employment, or investment for the year.

Step 9             Aggregate the assessable income of the person for the year from each business, employment, and investment.

Step 10          Reduce the aggregate in Step 9 by any deductions available for the year under regulations 2, 3, 4, 5, and 6 and, where the person is an individual, any deductions available for the year under sections 39, 57, and 60 of the Act.

Step 11          The resulting amount is the person’s chargeable income for the year.

 

SCHEDULE TWO

Regulation 25

 

TAX INSTALMENTS PAYABLE BY MEMBERS OF

CERTAIN ASSOCIATIONS

 

1. The associations, occupational groups, and classes of persons mentioned in sub-regulation (1) of regulation 25 are—

 

 

Association or Occupational Group

Class of Persons

Type 1

 

 

 

 

 

Type 2

 

Type 3

Type 4

 

Type 5

Type 6

Type 7

 

 

 

 

 

 

Type 8

 

Type 9

The Ghana Private Road Transport Union, the Ghana Co-operative Transport Association, the Progressive Transport Owners Association and any similar organisation or association or their agents identified by the Commissioner that operates at any lorry park, taxi rank, or similar place  

Ghana National Tailors and Dressmakers Association

Susu Collectors Association          

Ghana Chop Bar And Cooked Food Sellers Association (Traditional Caterers Association)

Butchers Association          

Hairdressers Association

Garage Owners Association

 

 

 

 

 

 

Licensed Diamond, Gold Buyers and Winners Association

Co-operative Distillers Association of Ghana

Any person who owns a vehicle of the type referred to in paragraph 2 of this Schedule.           

 

Machine owners

 

Susu collectors

Bar owner

 

Butchers

Hairdressers

Garage owners (mechanics, welders, sprayers, electricians, blacksmiths, vulcanizers, machinists)

Licensees and sub-agents

Manufacturers and retailers of alcoholic beverages

 

2. The tax to be collected from and payable by Type 1 class persons is as follows:

Owner of—

Rate of Tax

1.  Taxi and cars on hire within town          

2. “Trotro” vehicles 19 seats and less                    

3. “Trotro” vehicles 20 to 34 seats             

4. “Trotro” vehicles 35 seats and more                  

5. Light dry cargo service (Market Service)          

6. “One pound one pound” cars      

7. Mini buses other than “trotro”      

8. Long distance passenger buses           

9. Container trucks in Accra-Tema

10. Long distance cargo trucks and articulated vehicles

11. Wet cargo vehicles including water tankers   

12. Tipper trucks

¢2,000 per week

¢2,000 per week

¢3,000 per week

¢4,000 per week

¢3,000 per week

¢50 per ¢1,000 fare per trip           

¢50 per ¢1,000 fare per trip           

¢50 per ¢1,000 fare per trip           

¢50 per ¢1,000 charge per trip

¢50 per ¢1,000 charge per trip

¢50 per ¢1,000 charge per trip

¢50 per ¢1,000 charge per trip

 

3. The tax payable in accordance with paragraph 2 shall be paid—

(a) in the case of persons falling within items 1, 2, 3, 4, and 5 of

the table, during the course of the week in which payment is to be made.

(b) in the case of persons falling within items 6, 7, 8, 9, 10, 11, and 12 of the table, at the start of each trip.

4. The tax to be collected from and payable by Type 2, 3, 4, 5, 6, 7, and 8 class of persons is as follows:

 

Class of                                 Sub-class of Persons                                           Rate  

Persons

Type 2                                                1 Machine                                          ¢1,250 per week

2-3 Machines                                     ¢2,250 per week

4-5 Machines                                     ¢3,200 per week

Above 5 Machines                            ¢4,200 per week

 

Type 3            —                                                                                            ¢3,200 per week      

 

Type 4                                                Category A                                        ¢4,200 per week

Category B                                        ¢3,200 per week

Category C                                        ¢2,000 per week

Category D                                        ¢ 1,000 per week

           

Type 5                                                Category A                                        ¢4,200 per week

Category B                                        ¢3,200 per week

           

Type 6                                                Category A                                        ¢4,200 per week

Category B                                        ¢3,200 per week

Category C                                        ¢2,000 per week

           

Type 7                                                Cities                                                  ¢5,200 per week

Urban                                                  ¢3,800 per week

Rural                                                   ¢2,000 per week      

 

Type 8                                                Licensee                                            ¢50,000 per month

Sub-agent                                          ¢10,000 per month

5. The tax payable in accordance with paragraph 4 shall be paid during the course of the week or month in which payment is to be made.

6. The tax to be collected from and payable by Type 9 class of persons is as follows:

 

Category of Person                       Rate of Tax  

Manufacturer                          5% of the cost of drums of alcohol sold     

Retailer                                   5% of the cost of alcohol retailed   

7. The tax payable in accordance with paragraph 6 shall be paid during the course of the week the drums are sold or the alcohol is retailed.

 

SCHEDULE THREE

Regulation 47

 

Step 1             Separately for each business of the person, identify depreciable assets owned by the person as at the end of the person's last basis period ending within the year of assessment 2000 that are used by the person in carrying on the business.     

 

Step 2             Work out in accordance with sub-regulation (2) the residual value of each depreciable asset as at the time referred to in Step 1. 

 

Step 3             Identify the class of each depreciable asset in accordance with paragraph 2 of the Third Schedule of the Act. 

 

Step 4             Separately for each business and each of the person’s Class 1, 2, 3, and 4 depreciable assets, add together the residual values of the assets of that Class.    

 

Step 5             The result is treated as the written down value of the Class 1, 2, 3, or 4 pool of depreciable assets, as the case requires, as at the time referred to in Step 1.           

Step 6             Add to the written down value of the pool as at the time referred to in Step 1, the cost base of assets added to the pool after that time but before the end of the first basis period.           

 

Step 7             Reduce the result, but not below zero, by any consideration received from the realisation of an asset from the pool during the first basis period. (Any excess of amounts so received is treated in accordance with subparagraph (4) of paragraph 3 of the Third Schedule of the Act).           

Step 8             The result, if any, is the written down value of the pool at the end of the first basis period to which the formula in subparagraph (1) of paragraph 3 of the Third Schedule of the Act shall be applied.       

 

Step 9             In the case of a Class 5 or 6 depreciable asset and subject to the modifications in Step 10, apply paragraph 4 of the Third Schedule of the Act using the cost base of the asset worked out in accordance with section 99 of the Act.      

 

Step 10          In applying the limit in subparagraph (3) of paragraph 4 of the Third Schedule of the Act and for the purposes of the definition of “written down value” in subparagraph (4) of that paragraph, capital allowances granted to a person for the asset includes the excess of the cost base of the asset over the residual value of the asset as at the end of the person's last basis period ending within the year of assessment 2000.           

 

YAW OSAFO-MAAFO

Minister responsible for Finance

 

Date of Gazette Notification: 22nd June, 2001.

Entry into force:

 

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