Ghana Info
Joined: 23 Feb 2007
Posts: 16
Home Country: ghana
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 Posted: Fri Mar 02, 2007 8:16 am Post subject: DOING BUSINESS IN GHANA / GHANA BUSINESS GUIDE |
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DOING BUSINESS IN GHANA
STARTING A BUSINESS
STANDARDIZED COMPANY
Legal Form: Private Limited Liability Company
Minimum Capital Requirement: 5,000,000
City: Accra
Registration Requirements:
Procedure 1. Check for availability of company name and obtain incorporation forms
Time to complete: 2 days
Cost to complete: name search - C60,000 per search; complete set of Incorporation forms C70,000
Comment: A search is conducted for the proposed name of the company. If available a reservation is made.
The Incorporation documents consist of the following forms.
- Company Regulations 4 copies
- Forms 3 (Statement of Shareholding structure) 5 copies
- Form 4 (Stated Capital) 2 copies
- Tax Identification Number form 1 copy
The Company Regulations may be drawn up by the party proposing to incorporate the company or the standard format which comes with the incorporation forms may be adopted.
The Information required to fill the forms are:
(1) Name of Company
(2) Nature of the business that the subscribers intend to engage in.
(3) Full names of subscribers/shareholders, their addresses, percentage shareholdings, occupation and any directorships in any other company
(4) The full names of the first directors of the company. Note, Directors to be of sound mind, not infant i.e. under 21 and must be resident in Ghana
(5) Full name and address of Company Secretary and Auditors of company, (a letter of consent to act as Auditor is attached)
(6) The number of shares the company is to be registered with and the stated capital
(7) Minimum nominal capital for company owned 100% by Ghanaians is C5million
Procedure 2. Apply to the Registrar-General's Department to obtain a incorporation certificate
Time to complete: 3 days
Cost to complete: C620,000 = C500,000 for registration of a limited company + C100,000 filing fee for Forms 3 and 4 + C20,000 for Registration Certificate
Comment: The promoters deliver to the Registrar 4 copies of the proposed Company Regulations. The Regulations must be printed, type written or in some other legible form which the Registrar accepts. Upon the assessment of the incorporation documents, cash or Bank Certified cheque is made payable to the Registrar General. Faster service is due to the ongoing computerisation program at the Registrar Generals department..
Procedure 3. A Commissioner of Oaths authenticates forms required for the certificate to commence business.
Time to complete: 1 day
Cost to complete: C20000
Comment: The forms required to be completed for the issuance of the Certificate to Commence Business (Forms 3 & 4) require authentication before a Commissioner of Oaths.
Procedure 4. Obtain from the Registrar-General's Department the certificate to commence business
Time to complete: 3 days, included in procedure 1
Cost to complete: 0.5% of the stated capital as commencement tax + C100,000 (registration fee with IRS)
Comment: After incorporating the company the promoters must within 28 days complete forms 3 & 4, indicating, inter alia, the names, addresses, businesses/occupations of the Directors and Secretary of the company, name and address of qualified auditor, address of Registered Office, register of Members, amount of stated capital and number of issued and unissued shares of the company. These forms are required to be signed by all directors and a secretary to the company. The amount of 0.5% of the stated capital is collected by the Registrar Generals Department for and on behalf of the Internal Revenue Service ( I.R.S.) as the company's Commencement Tax.
The Registrar of Companies now automatically registers new companies with the I.R.S. With companies engaged in general commercial/industrial activities the minimum registration fee is C10,000.00 and the maximum registration is C100,000.00 as calculated on projected turnover. Obtaining a tax clearance certificate if the company is otherwise entitled to a certificate on a satisfactory tax position will cost C2,000.00 and VAT is charged at 12.5%.
Procedure 5. Deposit paid in capital in an account
Time to complete: 1 day
Cost to complete: no charge
Comment: Present copies of regulations of the company; certificate of incorporation and certificate to commence business; signatories of authorised representatives of the company.
Procedure 6. Obtain a company stamp and a company seal
Time to complete: 1 day
Cost to complete: C35000
Comment: A company stamp is necessary for the day to day running of a company. As letterheads and signatures of company officials can usually be forged the rubber stamp is used to authenticate all documents and correspondence emanating from the company. A rubber stamp takes about a day to obtain and costs between C30,000 - C40,000.
Rubber stamps are easily forged and the company may opt to obtain a company seal in addition to the rubber stamp. However, the seal takes about 6 weeks to obtain. It has to be embossed with the company's logo and certain relevant details. Currently, there is only one company that can produce the Seal in Ghana i.e. K-Dom Limited. A small one costs C700,000 whilst a large one costs C2,000,000 - C3,000,000. In any case, the step does not stop the following formalities.
Procedure 7*. Apply for business licenses at the Metropolitan Authority
Time to complete: 7 days (simultaneous with procedure 6)
Cost to complete: C915,000 (varies, depending on the nature of the business)
Comment: The cost to complete depends on the type of business and the category in which it falls. Documents to be submitted depend entirely on the type of enterprise, Restaurants for example, must have permits from the Fire department, Town & Country Planning Authority, inspection certificate from the Ghana Tourist Board, etc.
Category A Turnover 5 billion C4,000,000.00
Category B Turnover 2.1 billion - 5 billion C2,450,000.00
Category C Turnover 1 billion - 2 billion C1,600,000.00
Category D Turnover 30 million - 1 billion C915,000.00
Category E Turnover 0 - 3 million C495,000.00
Procedure 8*. Inspection of work premises by the Metropolitan Authority
Time to complete: 1 day (included in the previous procedure)
Cost to complete: no charge
Comment: An officer of the Metropolitan Authority visits the business premises and assesses the type of business set up. The officer then determines at his discretion the category in which the business should be placed for purposes of assessing the license fee to be paid.
Procedure 9*. Register employment vacancies with the Employment centre.
Time to complete: 1 day (simultaneous with previous procedure)
Cost to complete: No charge at government labor department. With private employment agencies between C30,000 - C100,000.
Comment: The employer must go to the Employment Centre to register vacancies available on Vacancy Registration Card PEC 6.
This procedure is only relevant to employees with minimum wage.
Procedure 10*. File employment contracts with the Employment Centre after hiring
Time to complete: 1 day (simultaneous with previous procedure)
Cost to complete: no charge
Comment: This and the previous procedure are in the same building, however, there is an intervening procedure in-between - the hiring of the employee. Therefore they are considered 2 procedures. Chief Labour Officer is required by the Labour Decree to attest each employment contract and confirm its validity and compliance with Ghanaian Labour Laws and International Labour Organisation Laws. In practice, this is seldom done.
Procedure 11*. Apply for Social Security
Time to complete: 1 day (simultaneous with previous procedure)
Cost to complete: no charge
Comment: Must attach the list of employees, salaries, their Social Security Numbers and the company's Certificate of Incorporation and Certificate to Commence Business.
Procedure 12*. Obtain the Environment certificate
Time to complete: 60 days (simultaneous with previous procedure)
Cost to complete: C100,000 (varies)
Comment: The company submits an application describing the location, current zoning classification, nature of processes to be utilised, and the likely environmental impact. Environmental authorities or officials visit within 1 day of application. The cost of the visit is paid for by the company. The Environmental Officer classifies the project into (1) no impact; (2) minimal impact; (3) impact. In case two (2) the company must file a detailed report. In the case of three (3), a full environmental impact assessment is done.
No fixed fees as the cost depends on which consultant is commissioned to assess the environmental impact of the work involved. The purchase of Environmental Assessment Preliminary Registration Form costs C5,000.00. The Environmental Assessment Registration Form costs C20,000.00. All other costs incurred will depend on the type of company to be set up, the environmental impact of the company or organization to be set up and the fees of the consultant commissioned to do the assessment.
Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*).
TAXATION
Corporate tax
Main rate: 25%
Resident companies are taxed on their worldwide income; non-resident companies are taxed only on Ghanaian-source income. A company is resident if it is incorporated under the laws of Ghana or if its management and control are exercised in Ghana. Companies listed on the Ghana stock exchange and companies in the hotel industry are subject to a 25% rate. Lower rates may apply to companies in the manufacturing or agricultural industries, depending on location. Free Zone companies and rural banks are exempt from corporate income tax for the first ten years; thereafter, they are subject to an 8% rate. Exporters of non-traditional goods are also taxed at 8%. Dividends paid to companies and individuals are subject to a 10% final withholding tax. A branch pays an additional 10% tax on its repatriated profits.
Individual tax
Progressive rates to 25%
Resident individuals are taxed on their worldwide income; non-residents are taxed only on income sourced in Ghana. Residents are subject to tax at progressive rates up to 25%, but non-residents are taxed at a flat rate of 20%. An individual is resident if a citizen of Ghana (except where the individual has a permanent home outside of Ghana); or if present for 183 days in any 12-month period beginning or ending in the tax year; or if absent temporarily for less than 365 days and where the individual has a permanent home in Ghana. Dividends received are taxed by withholding at 10%.
Capital gains
Capital gains tax applies
Capital gains tax of 10% applies to capital gains of companies and individuals.
Indirect tax
VAT standard rate: 12.5% (plus national health insurance levy of 2.5%)
Value-added tax (VAT) applies to most transactions at the standard rate of 12.5%. Exports are zero-rated. Exemptions are provided for livestock, seeds, vegetables, agricultural inputs, financial services, education and medical services, domestic electricity, water and land, buildings and construction. Registration is compulsory for businesses with a taxable turnover of GHC 25m over a three-month period (GHC 100m in a 12-month period). Group registration is possible. A national health insurance levy (NHIL) of 2.5% is also imposed on imports and on supplies of goods and services, but the levy is not imposed on exports.
Tax administration and compliance
Tax year: Calendar year
A company must submit a tax return within four months after the end of the basis period ending within the tax year. Any person receiving income not subject to deduction of tax at source is required to make quarterly advance tax payments. Tax is withheld at source from employment income. Employees deriving income other than employment income must submit a tax return within three months after the end of the tax year.
Additional tax information
Withholding taxes: Dividends and Interest 10%, Royalties 15%, Management and technical service fees 20%.
Tax treaties: Ghana has concluded tax treaties with the UK and France.
Dividends: Dividends are taxable income but exempt from withholding tax when paid to a resident controlling corporate shareholder.
Revenue protection: There are transfer-pricing rules but no anti-tax haven (CFC) legislation.
Groups: There is no provision for group taxation.
Incentives: Hotels; export of non-traditional goods; rural or community banks; Free Zone enterprises, ICT, Agro processing.
Other taxes: Customs and excise duties, Gift tax, Mineral royalty, National reconstruction tax, Registration fees, Stamp duty. |
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