Our guide to Payroll in Ghana

Doing Business in Ghana

Investing in Ghana

Ghana is a country located in West Africa, bordered by the Ivory Coast (Côte d'Ivoire) to the west, Burkina Faso to the north, Togo to the east, and the Gulf of Guinea to the south.

Ghana has attracted the attention of international businesses investing in all sectors of the economy. The main sectors of investment within Ghana include agricultural and agro-processing sectors. The financial services and telecommunications sectors are growing rapidly. Further opportunities exist in manufacturing, ICT, tourism, gold, diamonds, and oil and gas.

The major sources of foreign currency are Gold, cocoa, and oil productions, as well as remittances from citizens working abroad.

Basic Facts about Ghana

General Information

Full Name: Republic of Ghana

Population: 34.42 million

Capital: Accra

Major Languages: English, African languages including Akan, Ewe

Major Religions: Christianity, indigenous beliefs, Islam

Monetary Unit: Ghana cedi (GH₵) (GHS)

Main Exports: Gold, crude petroleum, cocoa, manganese ore and palm oil

GNI per Capita: US $2,38 (World Bank, 2018)

Internet Domain: .gh

International Dialing Code: +233

How to Say

How are you? Wo hotesen?

Good morning: Maa chi

Good evening: Maajo

Do you speak English? Ani owieoBlofo lo?

Good bye: Nanteyie

Thank you: Medaasi

Registrations and Establishing an Entity

A company is not required to have a legal entity established in Ghana in order to process payroll. To process companies’ payroll, the firm will need formal registration of business at Registrar-General’s department and thereafter at the Ghana Revenue Authority.

A unique computer-generated Tax Identification Number (TIN) is given to tax payers for all official transactions.

Banking

It is not mandatory to make payments to employees or the authorities from an in-country bank account. Generally, banks are open to the public from 8.30AM to 4.00PM Monday to Friday. Some banks are open on a Saturday from 8:00AM to 1:00PM

Working Week

The working week in Ghana is Monday to Friday. The working day for commercial offices is usually 8:00AM to 5:00PM. Lunch breaks are usually one hour. Some offices and shops will be open from 8.00AM to 1.00PM on Saturdays. Government offices will not be operational before 9.00AM.

Employment Law

Holiday Accrual/Calculations

Every employee is entitled to a minimum of 15 working days of paid annual leave after 12 months of continuous service. Public holidays are separate from annual leave and must not be deducted from leave entitlement. Employers may provide enhanced leave entitlements beyond the statutory minimum based on company policy, seniority, or collective agreements.

Maternity Leave

A female worker, upon production of a medical certificate from a medical practitioner or midwife stating the expected date of confinement, is entitled to at least 12 weeks’ maternity leave in addition to any annual leave entitlement. Maternity leave is fully paid, including all benefits. Where the confinement is abnormal or involves multiple births, maternity leave is extended by at least two additional weeks.

Paternity Leave

There is currently no statutory provision for paternity leave in Ghana.

Sickness

Where an employee is absent due to sickness certified by a medical practitioner and the illness occurs during annual leave, the period of illness shall not be counted as annual leave. While the Labour Act does not prescribe a fixed number of sick leave days, employees are entitled to medically certified sick leave.

National Service

Under Ghanaian law, graduates of accredited tertiary institutions are required to complete one year of national service. The National Service Authority, a government institution, administers and regulates the national service programme.

Tax & Social Security

The tax year runs from 1 January to 31 December.

Income Tax

Residents are subject to tax on chargeable income accruing in, derived from, brought into or received in Ghana. Non-residents are subject to tax only on chargeable income accruing in or derived from Ghana.

Individuals are considered a resident in Ghana if they;

• Have been in Ghana for at least 183 days in a 12-month period that begins/ends during the year of assessment.
• An employee or official of the government of Ghana posted abroad during the year of assessment
• A citizen with a permanent home in Ghana who is temporarily absent from Ghana for no longer than 365 successive days
• Non-resident individuals pay taxes at the flat rate of 25%.
• Employees in Ghana pay income tax using the Pay As You Earn system. PAYE contributions are withholdings from salaries of employees to satisfy their income tax responsibilities. PAYE is computed with the personal income tax rates.

The income tax rates are as follows:

Social Security

The Social Security and National Insurance Trust (SSNIT) is a statutory public trust charged with the administration of Ghana’s National Pension Scheme.

The Pension Scheme administered by SSNIT has a registered active membership of over one million and over 100,000 pensioners who collect their monthly pension from SSNIT. This is regulated by the National Pension Act 2008, which is administered by the Social Security and national Insurance Trust (SSNIT).

Employers are expected to ensure that employees in their employment are registered and that contributions are paid on their behalf. Employees may elect to make additional contributions. There is also voluntary coverage for self-employed persons.

Social security contributions in Ghana are mandatory. Those exempted are:

• Officers and men of the Armed Forces and persons exempted by law
• The Justices of the Superior Court as exempted under the constitution
• All diplomatic agents

Payments to the Social Security and National Insurance Trust must be made within 14 days from the beginning of the following month.

An employer who fails to register the company and/or employees will be required to pay all the contribution which should have been deducted from the employees and penalty (3% per month) due from the day they qualified to register.

Statutory contributions towards retirements are classified into three, as states below:

• First tier: A mandatory basic social security scheme
• Second tier: A mandatory fully funded and privately managed occupational pension scheme
• Third tier: A voluntary fully funded and privately managed provident fund and personal pension scheme

The mandatory monthly pension contribution rates are as follows:

• For employers: 13% of the employee’s salary; and
• For employees: 5.5% of the employee’s salary.

Reporting

The employer has a responsibility to file monthly tax returns on behalf of the employee.

Tax withheld must be filed and payment made by the 15th of the month following the month in which the tax is withheld. Employers are required to file employer’s annual tax returns on behalf of their employees not later than 30th April following the end of every year of assessment specifying the employee income, tax deduction, exempt income, reliefs and chargeable income.

Payroll

It is not mandatory that payments be made from an in-country bank account.

Reports

Payroll reports must be kept for at least 6 years.

New Employees

The deadline for a new employee to be registered with the authorities is their start date.

Upon employment, new hires are required to submit the following to their current employer:

• Social Security (SSNIT No.)
• Taxpayer Identification No. (TIN)

To secure these numbers, new employees need to register with SSNITand GRA prior to their employment. This is to ensure that the employer can process the respective statutory contribution of the employees.

Registration with the Bureau of Internal Revenue (BIR) to secure TIN will follow a different process. The employee has to fill out the Application for Registration (BIR Form 1902) and attach a copy of the birth certificate. The employer will submit the form to the Revenue District Office (RDO) where the company is registered.

Leavers

There is no specific time-scale for paying leavers their final salary payment. The local authorities must be notified of the leaver.

Employee Benefits

Expenses should be paid on expenses forms and supporting documents should have the company’s name attached to it to avoid it being taxable.

Visas & Work Permits

To work in Ghana, both a residence permit and a work permit are needed.

Applications for work permits need to be directed to the Ghana Immigration Service (GIS), along with a completed and signed application, the following should be supplied:

• CV
• Any educational and professional certificates
• Work contract
• A police report from your country of residence
• A medical report
• Copies of the relevant pages in the passport

The employer should be able to deal with the application. The usual processing time is four weeks.

Residence permits are granted by the Ghana Immigration Service to expatriate personnel employed by companies or individuals under the immigration quota system. The immigration quota specifies the number of foreign nationals a person or firm is permitted to employ in Ghana in a particular occupation.

A foreign national on a company’s quota automatically receives a residence permit but must apply for the permit to be stamped into his or her passport.

• National Service is a mandatory 1-year program for graduates of accredited institutions.
• There is currently no statutory provision for paternity leave.
• Sick leave is only recognized when it overlaps with annual leave, and must be certified by a medical practitioner.
• Salary payment is generally made monthly, at the end of the month.

Further Information

For more information, or assistance with Ghana Tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.