I. THE INTERNAL REVENUE ACT 2000, ACT 592
II. THE INTERNAL REVENUE REGULATIONS 2001, L.I. 1675
The Commissioner-General of the Ghana Revenue Authority (GRA) wishes to inform the general public that;
i. by virtue of the Internal Revenue (Amendment) (No 2) Act, 2013, Act 871, the following amendments have been made to the Internal Revenue Act, 2000 Act 592.
ii. that Regulation 16 of the Internal Revenue Regulations, 2001, (L.I. 1675) that governs the payment of tax on rent income has been amended by the Internal Revenue (Amendment) (No 2) Regulations, 2013, (L.I. 2208).
I. AMENDMENTS TO THE INTERNAL REVENUE ACT 2000, ACT 592
First Schedule of Act 592 Amended
1. The First Schedule to Act 592 is amended as follows:
(a) Paragraph 2 of Part One (1)
The income tax rate applicable to non-resident individuals is 20%
(b) In Part Two (2) by
(i) The substitution for Paragraph I as follows
The income tax rates applicable to companies (other than a company principally engaged in the hotel industry) and from income from goods and services provided to the domestic market by free zone enterprises after their tax holiday are:
Nature of Income Rate of Tax
Income from the export of non-traditional goods 8%
Other Income 25%
(ii) Paragraph 6B of Part Two (2) Inserted
6B The income tax rate applicable to exports of a free zone enterprise outside the domestic market shall not exceed 8%
(c) Part Five (V) - Rate of Non-Resident Tax
(i) Paragraph (b)
The rate of withholding tax applicable to a payment in the case of royalties, natural resource payments and rents is 15%
(ii) Paragraph (c)
The rate of tax applicable in the case of management and technical service fees is 20%
(d) Part Seven (VII)
The rate of tax applicable to a non-resident person of income from transportation and communications under section 67 is 15%
(e) Part Eight (VIII)
The rate of tax applicable to non-residents under section 86 is 20%
2. IMPOSITION OF CAPITAL GAINS TAX ON PETROLEUM OPERATIONS
The provisions of Chapter Two (2) of the Internal Revenue Act, 2000, Act 592 which related to Capital Gains now apply to petroleum operations. This means that chargeable assets disposed of in petroleum operations will now attract Capital Gains Tax.
SECTION 11A OF ACT 592 INSERTED
TAXATION OF FREE ZONE ENTERPRISES
A free zone developer or enterprise granted a license under the Free Zones Act, 1995 (Act 504) is exempt from the payment of income tax on profits for the first ten years from the date of commencement of operations.
These amendments came into force on 31st December, 2013.
II. AMENDMENTS TO THE INTERNAL REVENUE REGULATIONS 2001, L.I. 1675
The Internal Revenue Regulations, 2001, (L.I. 1675) is amended by the substitution for regulation 16 as follows:
Rate of Tax on Rent Income for Residential Premises
16(1) Where an individual receives rent income from any residential premises the Commissioner-General may calculate tax on the rent income separately at a flat rate of 8% on the gross rent income in the year of assessment. This means that the landlord may opt for and therefore be taxed at 8% on the gross rent income from residential premises in a year of assessment.
Rate of Tax on Rent Income for Non-Residential Premises
16(2) Where an individual receives rent income which is not a business income from any non-residential premises in any year of assessment the Commissioner-General shall calculate tax on the rent income separately at the flat rate of 15% on the gross rent income in the year of assessment. This means that the rate of tax on the gross rent income from non-residential premises which is not a business income is 15%.
16(3) In both cases, that is, (1) & (2) above, the amount shall be paid as a Final Tax to the Commissioner-General and that amount shall not be included in ascertaining the income of the individual.
16(4) Where (3) above applies, the individual shall not be entitled to any deductions under Division III of Part III of Chapter I of the main Act 592.
16(5) Where a person other than an individual receives rent income which is not a business income in any year of assessment,
(a) That person shall pay tax at the rate of 8% in the case of residential premises
(b) That person shall pay tax at the rate of 15% in the case of non-residential premises; and
(c) In 5(a) & (b), sub-regulations (3) & (4) above shall apply to that income
Withholding of Tax on Rent Income by Specified Entities
16(6) Where any entity or institution specified in Schedule Four of L.I. 1698 (2002) pays any money as rent in respect of any residential or non-residential premises, the entity making the payment shall withhold tax at the rates specified on the gross rent income. The entities are:
2. Financial Institutions
4. Educational Institutions
5. Medical Establishments
6. Public Boards and Corporations
8. Departments of Ministries
9. Government Agencies
10. Co-operative Societies
11. Diplomatic Missions
12. Consular Offices
13. International Organizations
14. Non-Governmental Organizations
The amendments came into force on 26th February, 2014.
All landlords who have already paid the lower rate or had a lower rate withheld for non-residential premises are urged to contact the nearest Domestic Tax Revenue Division (DTRD) office to make up the difference.
All tax on rent income must be paid at the Large Taxpayer Office (LTO), Medium Taxpayer Offices (MTOs) and Small Taxpayer Offices (STOs) of the DTRD of the Ghana Revenue Authority (GRA) throughout the country.