Income Tax (Amendment) Act, 2023 (Act 1094)
By Ashley Rix
Published on May 25, 2023

This Act has a gazette date of 3 April 2023 and is expected to take effect from this date or as specified under any further guidelines issued by the Ghana Revenue Authority (GRA).

Introduction of a minimum chargeable income regime

Businesses with losses for the previous five (5) years of assessment may be required to pay a minimum income tax on their income. The minimum chargeable income may be assessed at 5% on turnover of the qualifying businesses.

The following are eligible for exemption from the minimum chargeable income regime:

  • businesses within the first five years of of operations; and
  • farming businesses.

Restriction on deduction of foreign exchange loss

Foreign exchange losses incurred on financial instruments by taxpayers in the production of incomes shall not be deductible if:

• the losses are of capital nature;

• the losses are of unrealised nature; and

• the losses are incurred on transactions between two resident persons

Non-deductible foreign exchange losses of capital nature may be capitalised, and capital allowance granted.

Taxation of lottery operations

Persons engaged in the operation of a lottery business are subject to income tax at the rate of 20% on their gross gaming revenue (the total amount of bets placed less any winnings paid or payable). Lottery operations include betting, gaming, and any game of chance.

Persons who engage in betting, gaming and other game of chance will now have their gross winnings subjected to a 10% final withholding tax.

Unification of the carry-forward rules on operating tax loss

All businesses may carry forward operating tax losses from business activities for a period of five years irrespective of the sector of operations.

Revision of individual income tax bands and rates

Individual income tax bands for resident individuals is amended by introducing an additional income tax band of 35% for individuals with annual income exceeding GHS600,000. The new applicable tax bands for resident individuals are as follows:

Chargeable Income (Annual)Chargeable Income (Monthly)Rate of Tax
First GH¢4,824First GH¢402NIL
Next GH¢1,320Next GH¢1105%
Next GH¢1560Next GH¢13010%
Next GH¢36,000Next GH¢3,00017.5%
Next GH¢196,740Next GH¢16,39525%
Next GH¢359,556Next GH¢29,96330%
Exceeding GH¢600,000Exceeding GH¢50,00035%

Upward revision of the maximum limits of vehicle benefit

The maximum benefit limit for employees provided motor vehicle have been reviewed upwards as follows:

Benefit-in-kindNew Maximum LimitOld Maximum Limit
Driver and Vehicle with Fuel12.5% of TCE up to GH¢1,500 per month12.5% of TCE up to GH¢600 per month
Vehicle with Fuel10% of TCE up to GH¢ 1,250 per month10% of TCE up to GH¢500 per month
Vehicle only5% of TCE up to GH¢625 per month5% of TCE up to GH¢250 per month
Fuel only5% TCE up to GH¢625 per month5% of TCE up to GH¢250 per month
TCE = Total Cash Emoluments

Revision of the optional rate for taxation of realization gains

The optional tax rate for individuals on their gains from realisation of investment assets and gifts received other than in respect of business activities or employment is increased to 25% (from 15%). These gains may be taxed either at the individual’s top marginal tax rate, or at the new rate of 25%. individual.

Tax on realization of assets and liabilities

Persons who realize an asset or liability are now required to file a return in a prescribed form within 30 days of the realization, imposing a new filing obligation on affected persons.

In addition, persons other than individuals providing consideration to a person in connection with the realization of an asset or liability (which is not specifically covered under withholding tax on investment returns) must withhold tax at the rate of 3% where the recipient is a resident person, or 10% where the recipient is non-resident.

Tax waiver on withdrawals from provident funds and personal pension schemes

Withdrawals made in 2023 from provident funds or personal pension schemes by employees due to permanent loss of employment or by self-employed persons, due to COVID-19 or the current economic hardship, are exempt from income tax.

Increment of the 1% Temporary Concessionary Rate to 5% for Eligible Entities

The rate for persons engaged in agriculture, rural banking, waste processing, provision of low-cost residential premises, unit trusts, mutual funds, and venture capital companies to 5% (from 1%) for the period of the concession.

Additional information on these laws and amendments can be obtained from the Ghana Revenue Authority website. The general public including all taxpayers are entreated to take note of these laws and amendments and comply accordingly.

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