Ghanaian taxation

Income tax, social security and pensions

Ghanaian taxation

Compared to international standards, income taxes are quite low in Ghana and its social security system has a good reputation.

The rates of income taxes in Ghana are staggered, not progressive. There are five tax levels according to your monthly salary as an employee, or annual income if you are self-employed.

The tax rates are as follows:

  • 0% for the first GHS 120 (monthly) / GHS 1,440 (yearly for self-employed persons)
  • 5% for the next GHS 60 / GHS 720
  • 10% for the next GHS 84 / GHS 1,008
  • 17.5% for the next GHS 2,136 / GHS 25,632
  • 25% for everything exceeding GHS 2,400 / GHS 28,800

The complicated thing is that you do not pay 25% of taxes on the whole income of, for example, GHS 2,500 monthly. Instead you pay 0% on the first GHS 120, 5% on the next GHS 60 and so on. This means you would pay an overall tax of GHS 410.20 on an income of GHS 2,500 (25% on the whole GHS 2,500 would be GHS 625, so the system is to your advantage).

There is a tax relief of GHS 35.00 per year if you have a dependant spouse or at least two children that you are taking care of. Moreover tax reliefs are granted for disabled people and workers that are 60 years or older.

At the moment (2012) the minimum wage in Ghana is GHS 4.48 per day (around €2). Over the last few years it has been raised constantly. Around 80% of Ghana’s workforce earns more than the minimum wage.

Social security and pensions

Ghanaians really appreciate Ghana’s social security system since it works reasonably well. The employer pays 13% of a person’s wage for the mandatory social security, while the employee pays an additional 5.5%.

The received pension is based on the number of years you have worked. The sum is calculated according to the three years with the highest salary, starting with 50% and going up to 80% (+1.5% per additional year). You will receive your pension on the condition you have contributed for at least 180 months (15 years) and you are older than 60 years (for some jobs e.g. mining it is 55). An important point for expats is the fact that pensions are not payable abroad.

Further reading

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