A Clear Guide to Salary Taxation in Ghana (2024–2025 Edition)

Understanding How Salaries Are Taxed in Ghana (2024–2025 Update).



As a worker in Ghana, understanding how your salary is taxed can help you plan your finances better. Ghana's tax system is designed to be fair and based on one's level of income. The Pay As You Earn (PAYE) system ensures that taxes are deducted from your salary and paid directly to the Ghana Revenue Authority (GRA). With the progressive tax structure, knowing how your salary is taxed can give you better control over your money.

What is PAYE Tax?

PAYE (Pay As You Earn) tax is a system where employers deduct income taxes from employees' salaries and pay it directly to the Ghana Revenue Authority (GRA). This system ensures that taxes are paid regularly throughout the year, rather than in a lump sum at the end of the year.

PAYE Tax Calculation

1.) The tax system is progressive, meaning the more you earn, the higher the percentage of income tax you pay.

2.) Resident individuals are taxed monthly based on the following income bands:

    •Tax-Free_: First GHS 490

    •5% Tax_: Next GHS 110

    •10% Tax_: Next GHS 130

    •17.5% Tax: Next GHS 3,166.67

    •25% Tax_: Next GHS 16,000

    •30% Tax_: Next GHS 30,520

    •35% Tax_: Any amount above GHS 50,416.67

- Non-resident individuals pay a flat tax rate of 25% on all income earned in Ghana.

3.) The GRA updates tax brackets annually to reflect economic changes.

4.) Taxpayers can access their tax information online through the GRA portal.

SSNIT Contributions

 •Employees contribute 5.5% of their gross salary to the Social Security and National Insurance Trust (SSNIT).

•Employers contribute 13%, but this portion doesn't affect the employee's take-home salary.

•SSNIT contributions fund pensions, invalidity, and other benefits for workers.

•Employees can check their SSNIT contributions online.

Example Calculation

Assuming a monthly salary of GHS 1,000:

1.) SSNIT Deduction_: 5.5% of GHS 1,000 = GHS 55

2.) Taxable Income_: GHS 1,000 - GHS 55 = GHS 945

3.) PAYE Tax_:

    - First GHS 490: tax-free

    - Next GHS 110: 5% = GHS 5.50

    - Next GHS 130: 10% = GHS 13.00

    - Remaining GHS 215: 17.5% = GHS 37.63

    - Total PAYE tax: GHS 5.50 + GHS 13.00 + GHS 37.63 = GHS 56.13

4.) Net Salary_: GHS 1,000 - GHS 55 (SSNIT) - GHS 56.13 (PAYE) = GHS 888.87

- This calculation is based on current tax laws and rates.

- Taxpayers should consult the GRA or a tax professional for personalized advice.

Key Points to Note

•Employers submit deducted PAYE taxes to the Ghana Revenue Authority (GRA) by the 15th of the following month.

•Workers with multiple income sources are expected to file an annual tax return using the GRA's Taxpayers' Portal.

•Taxpayers can pay taxes online or at designated banks.

•Failure to pay taxes on time may result in penalties and fines.

•Public sector workers can expect a 10% salary increment in their April 2025 payment, following recent negotiations and government approval.

Conclusion

Understanding salary taxation in Ghana can help you manage your finances effectively. Stay informed about tax updates and consult with tax professionals when needed.

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