After the registration process, some companies encounter non-compliance problems because they are not aware of their need to adhere to the regulatory compliance of the country they operate in. Read on to discover more about your compliance responsibilities and checklist to comply with as a Ghanaian business in order to avoid this. Before we start, you can learn more about compliance for startups.
Regulatory Compliance checklist for Ghanaian Companies
1. Annual Returns Filing
For Ghanaian businesses, this regulatory compliance is essential as it serves as a way for companies to inform the appropriate regulators of their present condition. Since it also denotes a renewal of registration, it is consequently regarded as necessary. It has to be submitted annually. The Office of the Registrar of Companies (ORC) is the main agency that is in charge of this compliance, and it requires every company both indigenous and foreign to file its annual returns once every year latest by 31st December. Other agencies like the Ghana Immigration Service (GIS) and Ghana Revenue Authority (GRA) require companies to file annual returns for updating the status of the number of foreign workers at the company and for tax-related information respectively.
The Companies Act, 2019, Section 126(7), provides that “where a company defaults in complying with the filing of Annual Returns and Financial Statements, the company and every officer of the company that is in default is liable to pay to the Registrar, an administrative penalty of 25 penalty units for each day during which the default continues.” The ORC will fully implement this provision as of 1st June 2023.
2. Company’s Income Tax Return
This is a direct tax that all registered entities that engage in taxable activity and generates money are required to pay. Every company must register with GRA as a taxpayer and submit this filing; this is done upon the incorporation of the company.
The standard rate of corporate income tax is 25%. However, current rates vary according to the type of business a company conducts, where it is located, and the industry in which it works. All taxpayers are obligated to submit their year-end tax returns and pay any unpaid taxes, the final return and tax are due four months after the end of the fiscal year. Every three months, every business must present an anticipated self-assessment. A provisional self-assessment that can be amended upwards or downwards until the last day of the company’s base period must be included with the yearly returns. Four quarterly installments of the self-assessment payment should be made on the last day of each quarter (i.e., March, June, September, and December).
If tax is not paid by the deadline, a penalty equal to 125% of the statutory rate is applied to the amount owing at the beginning of the term. The penalty is compounded each month.
3. Value Added Tax (VAT)
VAT is applied on all goods and services rendered in Ghana and imported into the country, except for some goods and services that are exempted. The standard rate for VAT is 15%. A Ghana Education Trust Fund Levy and Covid-19 Health Recovery Levy are also paid alongside VAT on a monthly basis.
The payment is made to GRA, and any default in payment leads to a fine being levied on the company. Avoid this by registering with Norebase, we expedite the tax filing process and ensure that your company is in compliance.
4. Social Security and National Insurance Trust (SSNIT)
This payment compensates for a portion of the income lost by workers in Ghana due to incapacity, aging, or death of a family member, where dependents receive a lump-sum payout. In addition to paying pensions and other benefits, it is also used to award emigration benefits to non-Ghanaian members who are permanently relocating elsewhere.
Registration and payment monthly for SSNIT is mandatory for all companies, both local and foreign, for or on behalf of their Ghanaian employees. The contribution plan is divided into three tiers, the last one is voluntary while the first two are mandatory. The needed contribution is 5.5% from the employee and 13% from the company. 13.5% of the 18.5% total contribution goes to the first tier schemes, while 5% goes to the second-tier schemes.
5. Pay as You Earn
In Ghana, employers are required to deduct tax from an employee’s salary and other bonuses, on a monthly basis. The highest rate is 30% for tax-resident employees. Non-resident employees’ salaries and other remuneration are subject to a flat rate of 25%. By the fifteenth day of the next month, employers are required to pay the GRA the deducted taxes. Employers must also submit yearly employee returns by 30 April of the year after the return-related year.
Overall, startups should seek legal counsel and other expert guidance to make sure they are adhering to all legal and regulatory standards in order to follow the compliance checklist for Ghanaian firms. At Norebase, we are happy to assist companies navigating their compliance . We have also built a software, Autocomply, that keeps you informed and updated on all your legal obligations and compliance to avoid missing deadlines, Join the waitlist here .
Register at Norebase today to ease your compliance journey.