Ghana
Ghana stands as a beacon of stability in a region that has seen its share of political upheavals. Its commitment to democratic principles, rule of law, and peaceful transitions of power provides a reassuring environment for investors. This stability is a critical factor for businesses considering long-term investments in West Africa.
Discover key insights into Ghana’s payroll and labour laws, supporting compliant and effective long-term workforce management across West Africa.
1. Introduction to Ghana
2. Setting Up a Business
3. Employment Practices
4. Taxation & Social Security
5. Payroll Operations
6. Hiring & Termination
7. Compensation & Benefits
8. Visas & Work Permits
9. Location-Specific Considerations
1. Introduction to 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
Full Name | Republic of Ghana |
Population | 34.42 million |
Capital | Accra |
Major Language(s) | English, African languages including Akan, Ewe |
Major Religion(s) | 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 $2,380 (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?
Goodbye: Nanteyie
Thank you: Medaasi
2. Setting Up a Business
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. TIN is required for employment, banking, tax payments, and other regulatory filings. Employees must apply for their TIN through the Ghana Revenue Authority (GRA).
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.
3. Employment Practices
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 15 days paid leave each year. Public holidays cannot be deducted from the leave entitlement. However, annual leave can range from 21 to 36 days depending on an individual worker’s position and length of service within the company.
Maternity Leave
A female worker, on the production of a medical certificate that is issued by a medical practitioner or a midwife indicating the expected date of her confinement, is entitled to a period of maternity leave of at least 12 weeks in addition to any period of annual leave she is entitled to after her period of confinement.
Whilst on maternity leave, the employee shall be entitled to be paid her full pay and other benefits to which she is otherwise entitled.
Maternity leave may be extended for at least two additional weeks where the confinement is abnormal or where in the same confinement two or more babies are born.
Paternity Leave
There is no provision for paternity leave in Ghana.
Sickness
A period of absence from work allowed due to sickness, which is certified by a medical practitioner and which occurs after the commencement of and during annual leave, shall not be deducted from annual leave. There are no other provisions on sick leave in Ghana.
National Service
Ghanaian students who graduate from accredited institutions are required under law to do one year of national service. The National Service Secretariat (NSS) is part of the Ghana Government and formulates the policies and structures for national service.
4. Taxation & Social Security
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.
- Are an employee or official of the government of Ghana posted abroad during the year of assessment.
- Are 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.
Income Tax Rates
CHARGEABLE INCOME (GHS) |
RATE OF TAX (%) |
First 4,828 |
0% |
Next 1,320 |
5% |
Next 1,560 |
10% |
Next 36,000 |
17.5% |
Next 196,740 |
25% |
Next 359,556 |
30% |
Exceeding 600,000 |
35% |
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 a penalty of 3% per month due from the day they qualified to register.
Statutory Contributions
- Employer: 13% of the employee’s salary
- Employee: 5.5% of the employee’s salary
5. Payroll Operations
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.
The penalties for the failure to pay tax on due dates are:
- Up to three months - 10% of the unpaid tax
- Exceeding three months - 30% of the unpaid amount
Payroll
It is not mandatory that payments be made from an in-country bank account. While the law does not prescribe a fixed salary payment date, it is standard practice to pay employees on a monthly basis at the end of the month.
Reports
Payroll reports must be kept for at least 6 years.
6. Hiring & Termination
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 SSNIT and 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.
7. Compensation & Benefits
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.
8. 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.
9. Location-Specific Considerations
- 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.
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