Foreign tax credit
A resident is entitled to a credit in respect to any foreign income tax paid, to the extent to which the tax paid is in respect of the resident’s foreign taxable income. The foreign tax credit available on a specific income type should not exceed the average rate of Ghanaian income tax of the resident for a year.
Under the Ghana Investments Promotion Centre Act, 2013 (Act 865), various incentives are available to encourage strategic or major investments in the country, particularly in the areas of agriculture; manufacturing industries engaged in export trade or using predominantly local raw materials or producing agricultural equipment, etc.; construction and building industries; mining; and tourism.
Incentives generally include exemption from customs import duties on plant and machinery; reduced CIT rates; more favourable investment and capital allowances on plant and machinery; reduction in the actual CIT payable, where appropriate; retention of foreign exchange earnings, where necessary; guaranteed free transfer of dividends or net profits, foreign capital, loan servicing, and fees and charges in respect of technology transfer; and guarantees against expropriation by the government.
Venture capital tax incentives include the following:
- Relief from stamp duty in each year on subscriptions for new equity shares in venture capital funds.
- Interest and dividends from investment in a venture capital company are subject to tax at 1% for the first ten years of assessment.
- Chargeable income is subject to tax at 1% for the first ten years of assessment.
- Carryforward of losses for five years after the year of disposal.
- Carryforward of losses from disposal of investment in a venture capital subsidiary for five years after the ten years of assessment.
Free zone developers/enterprises
Companies registered to operate as free zone developers/enterprises do not pay CIT for the first ten years of operation. After the ten-year corporate tax holiday has expired, the CIT rate on export outside the domestic market is 15% while income earned from sales in the domestic market is taxed at 25%.
Construction of residential premises
The income of a certified company from a low-cost housing business is subject to tax at 1% for a period of five years of assessment.
COVID-19 tax incentives
The government of Ghana has passed tax laws and initiated tax incentives aimed at alleviating the economic impact of the COVID-19 pandemic. These included the following:
- A 30% rebate of income tax instalments due from hotels, restaurants, education, arts and entertainment companies, and travel and tour agencies for the second to fourth quarters of 2021.
- Subject to specified conditions, waiving interest and penalties due on accumulated tax arrears up to December 2021 for taxpayers who arrange to settle the arrears by September 2021.
- Suspending quarterly income tax instalment payments for the second and fourth quarters of 2021 for qualifying small businesses using the income tax stamp system (such as retail traders, bakeries, estates and accommodation agents, dressmakers, hairdressers, beauticians, artisans, auto technicians, corn and other millers, butchers, vulcanisers, etc.).
- Suspending quarterly payments for vehicle income tax (VIT) for the second to fourth quarters of 2021 for qualifying owners of primary commercial transport (i.e. taxis and trotos).
- Indefinitely extending the tax exemption on capital gains on securities listed in Ghana's capital market.