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What are Non-Profit/NGOs in Ghana
Non-profit organization secretariats under the Ministry of Gender, Children and Social Protection define a Non-Governmental Organization (NGO) as a "non-governmental legal entity, association, or institution voluntarily established to mobilize and utilize resources for charitable, religious, cultural, educational, social, or communal purposes, or to pursue any other not-for-profit objectives intended for the public good". Although NGOs exist purposely to promote social welfare and contribute to national development, they nevertheless operate within Ghana's regulatory and legal framework.
Are Not-For-Profits Taxable?
In Ghana, the Income Tax Act, 2015 (Act 896) as amended, provides the legal basis for the taxation of all persons, with NGOs being no exception. NGOs, because of their non – profit status, are generally exempt from tax, but they sometimes engage in taxable activities such as employment, commercial business, investment income, and the provision of services. As a result, understanding the tax implications of NGO operations is essential to ensure compliance with the Ghana Revenue Authority (GRA) requirements.
This article seeks to provide readers a clear understanding of the tax implications of Non-Governmental Organizations in Ghana, delving into the Legal framework, corporate tax income exemption, employee-related costs, withholding tax, value-added tax, as well as annual filing.
SUMMARY TABLE
| Tax Category | Applicability | Statutory Conditions |
|---|---|---|
| Corporate Income Tax (CIT) on Charitable Activities | Not Applicable | Income derived mainly from approved charitable, religious, educational, or public-benefit activities is exempt under Section 97 of the Income Tax Act, 2015 (Act 896), as amended. |
| Corporate Income Tax (CIT) on Commercial Activities | Applicable | Income derived from commercial activities unrelated to the core objectives of the NGO is taxable in accordance with Sections 97(4) and 97(5) of Act 896. |
| Pay-As-You-Earn
(PAYE) |
Applicable | NGOs are required to pay PAYE on employee salaries regardless of their tax-exempt status, in line with the Income Tax Act, 2015 (Act 896). |
| Pension Contributions (SSNIT and Tier 2) | Applicable | Employer and employee pension contributions of 13% and 5.5% respectively apply to NGOs employing staff under Ghana's National Pension Act 2008(Act 766). |
| Withholding Tax | Applicable | Withholding tax applies to payments on professional fees, consultancy services, management fees, rent, and contractor payments at their prescribed rates. |
| Value Added Tax (VAT) Registration | Applicable | VAT registration is required where the NGO makes taxable supplies and exceeds the VAT registration threshold of GHS750,000 under the Value Added Tax Act, 2025 (Act 1151). |
| VAT on Non-Taxable or Charitable Activities | Not Applicable | NGOs which do not engage in taxable supplies are not required to charge, file, or pay VAT. |
| Donor Funding and Grants | Not Applicable | Grants and donations received and applied exclusively to the approved charitable objectives of the NGO are exempt from income tax. |
| Church Tithes, Offerings, and Donations | Not Applicable | Tithes, offerings, and donations in cash and kind received by religious institutions are exempt from tax when used for religious or charitable purposes under Section 97 of Act 896. |
| Annual Income Tax Returns | Applicable | NGOs are required to file annual income tax returns within four months after the end of the accounting year. |
| Submission of Audited Financial Statements | Applicable | Annual audited financial statements must be submitted to the Ghana Revenue Authority and the Registrar General Department in compliance with statutory filing requirements. |
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
