PAYE calculator in Ghana

The PAYE calculator in Ghana

Built Accounting

Employees pay their taxes using a system known as pay-as-you-earn, or PAYE, in which the government deducts taxes from their income at source on a monthly basis. This article will elaborate more on the PAYE calculator in Ghana and other related issues.

How does the PAYE calculator in Ghana work?

The PAYE system is a type of income tax in which employers deduct and pay from employees’ earnings. The PAYE tax system requires that the deduction be reported by the fifteenth day of the following month. It’s important to note that residents’ PAYE is computed the same way as everyone else’s.

What rate of PAYE do I pay?

In Ghana, a tax of up to 50% of a resident’s basic salary is now levied at a rate of 5%. If an individual is paid overtime at a rate that is greater than 50% of the employee’s monthly basic wage, the excess is taxed at a rate of 10%.

2022 Annual Income Tax Rates Applicable to Resident Individuals

Chargeable Income GH ¢Rate(%)Tax GH ¢Cumulative Chargeable IncomeCumulative Tax
First 365 Free03650
Next 11055.54755.5
Next 1301013.0060518.5
Next 3000.0017.5525.003,605543.5
Next 16,395.00254,098.756,0004,642.25
Exceeding 20,000306,000  
PAYE calculator in Ghana

Monthly Income Tax Rates Applicable to Resident Individuals

Chargeable IncomeRate(%)TaxCumulative Chargeable IncomeCumulative Tax
First 4,380Free04,3800
Next 1,3205665,70066
Next 1,560101567,260222
Next 36,00017.549,18543,2606,522
Next 196,7402572,000240,00055,707
Exceeding 240,00030   
PAYE calculator in Ghana.

Read Also: How to install the tax calculator mobile app.

How to calculate your PAYE in Ghana

On the basis of your chargeable income, with this calculating system.

  • You’ll need to figure out what percentage of your taxes you’ll have to pay to the GRA. You should be aware that this tax will be applied to all resident employee salaries. This is only used to determine your tax burden. You can do this by using a PAYE calculator in Ghana, such as the one developed by Built Accounting, to make your job easier. The excess value of over 240,000 will be taxed at a rate of 30%.
  • Calculate the final value of your payable tax by subtracting all of the deductions you are qualified for from your total tax.

How is PAYE deducted from my salary?

Your employer deducts monthly PAYE at source using monthly progressive individual tax rates. Before computing PAYE, these are taken from the resident’s employee’s salary. Before you can figure out how to compute PAYE in Ghana, you must first understand the deductions from employees’ wages. Employees are required to make the following contributions:

  • Employers pay 13 percent of employees’ basic salaries into the Social Security and National Insurance Trust, which is maintained by the Social Security and National Insurance Trust (SSNIT).
  • SSNIT manages a 5.5 percent Social Security Fund from an employee’s base wage.
  • An employer, employee, or both may contribute up to 16.5 percent of your base pay to a provident fund.
  • Second-tier Approved Trustee: An obligatory 5 per cent of an employee’s basic salary contribution that is privately managed by an authorised trustee.
  • Contributions and gifts to a worthwhile course.
  • Mortgage interest is paid on just one dwelling premise over an employee’s lifetime. 

So, what is the definition of tax relief? Tax relief is any government programme or policy initiative aimed at lowering the amount of taxes paid by individuals or businesses. Tax relief is a stipend paid to a resident in order to lessen their tax burden. These are for particular hobbies or behaviours that the government promotes in order to help us save money. On application to the Commissioner-General, these reliefs are activated.

READ ALSO: Ghana’s Total Relief

The following are some of the significant tax benefits obtained by Ghanaians:

  • Relief from responsibility/marriage

An individual who cares for their partner (wife/husband) or at least two children is eligible for a tax break of GH1,200 per year.

  • Disability

Assistance for people with disabilities

This 25% assistance is only available to disabled people who can prove to the Commissioner-General that they are disabled and solely earn money from businesses or jobs.

  • Dependent assistance for the elderly

This allows a resident individual who looks after a relative who is sixty years old or older to get GH1,000 per year in relief, with a maximum of two relatives.

  • Relieve from old age

This allows relief of GH¢1,500 per year to persons who are 60 years of age

  • Aid to children’s education

This allows a maximum of three children (biological/adopted/ward) attending any recognized registered educational institution in Ghana to receive GH600 per year in relief; this relief is awarded to a resident citizen who pays his or her child’s school tuition. This relief is not available to both parents in the case of the same kid or children.

What is a Tax Clearance Certificate (TCC) and how does it work?

The Ghana Revenue Authority issues a Tax Clearance Certificate (TCC). The TCC is a piece of documentation proof used to verify if a taxpayer has completed all of their required tax obligations, as well as to ensure that they are current on all of their payments. A Tax Clearance Certificate is required at GRA.

You’ll need the following items to apply for a TCC;

  • A Tax Identification Number (TIN).
  • Provide your identity as a taxpayer and the reason for obtaining Business registration certificates, as well as a portion payment of your Provisional or Self-Assessment, to receive a Tax Clearance Certificate.
  • To start a new business, you must first register with GRA, then apply for TCC and provide a bank statement (s).
  • A tax clearing certificate provided to an applicant must include the following information: (a) the taxpayer’s name; (b) the taxpayer’s Taxpayer Identification Number; (c) the term for which the Tax Clearance Certificate is valid, which may be a continuous period, and whether;

(i) The person owes tax; (ii) The person has made satisfactory arrangements for the payment of tax; or (iii) The Commissioner-General is currently satisfied that the taxpayer is in good standing, and (d) Any limitation on the purpose for which the Tax Clearance Certificate may be used.

A Tax Clearance Certificate is only valid for the time period and reasons stated on the certificate.

When is a TCC Necessary?

To execute the following transactions, you must submit a valid Tax Clearance Certificate, according to the Income Tax Act;

  • Renewal of professional body members’ licenses
  • To participate in any tenders or contracts awarded by Ministries, governmental bodies, or other entities.
  • To conduct business at the Lands Commission, such as land title registration
  • The TTC is necessary when applying for a license to operate as a customs clearing and forwarding agent to clear goods for commercial reasons from a port or a facility in Ghana, according to the Excise Act, 2014 (Act 878).

Other transactions covered by the TCC include; 

  • During the VISA application process, an embassy may ask for a TCC to verify your claimed income on the visa application.
  • To facilitate the application process, the TCC can be requested when an expatriate’s residence or work visa is renewed.
  • Some firms and companies (commercial or government) may ask you to present TCC in order to be added to the government supplier list.

How to apply for a Tax Clearance Certificate

  • To conduct business at the Lands Commission, such as land title registration.
  • The TTC is necessary when applying for a license to operate as a customs clearing and forwarding agent to clear goods for commercial reasons from a port or a facility in Ghana, according to the Excise Act, 2014 (Act 878).

How long can I hold a Tax Clearance Certificate until expiration?

  • When allowances are paid in cash, the deductions are added to the salary automatically.
  •  Before being included in the salary, in-kind benefits are translated to a quantifiable monetary value.

What are the taxes imposed on residents?

Employees who live in the state are taxed on their investment, business, and job income. 

Here are some examples of such taxes;

  • Tax on gifts
  • Gains resulting from the sale of assets and liabilities
  • Allowances and benefits paid in cash or in-kind to or on behalf of an employee, except reimbursement of an employee’s expense incurred in the course of employment, medical or dental costs, or any travel from or to Ghana, and redundancy compensation
  • Premiums or royalties are examples of profits derived from a property
  • Profits or gains derived from a trade, business, profession, or vocation
  • Gains and earnings derived from any job
  • Non-residents are subject to Ghanaian income tax on any money earned in Ghana from a trade, business, profession, or vocation, or from work performed in Ghana.

Tax Identification Number in Ghana

It’s a type of identifying system that’s used to pay taxes. This was created by the Ghanaian government as a one-of-a-kind method of identifying taxpayers and potential taxpayers. Individuals and organizations are expected to pay taxes on the interest or income they earn under this relatively new tax identification system, therefore TIN IDs are essential for any working Ghanaian.

How can you obtain your TIN number?

Download the TIN online forms from the GRA website, fill them out, and send them to the GRA office for processing.

Only once an organization has been registered with the Ghana Revenue Department (GRD) may it apply for a TIN.

On April 1, 2021, the National Identification Authority (NIA), in collaboration with the Ghana Revenue Authority and the Registrar General Department, announced that the Tax Identification Number (TIN) would be phased out in favour of the National Identification Authority (NIA) Personal Identification Number (PIN), also known as the Ghana Card PIN.

Existing taxpayers who have registered and been provided with Ghana cards can now link their Ghana card PIN to their TIN through a self-service portal on the GRA website, according to the release.

Built Accounting provides a tax calculator that can calculate each employee’s monthly PAYE as well as salary processing. Our PAYE Calculator in Ghana can assist you in determining the deductions and allowances that must be taken into account when calculating PAYE. The Built software is configured to apply the GRA demand amounts and then return the PAYE amount owed to your employees.

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