Ghana 2018/2019 Budget Speech & Income tax Changes

The Minister of Finance, Ken Ofori-Atta, presented the Budget Statement and Economic Policy of the Government of Ghana for the 2019 Financial Year to the parliament on 15 November 2018.

Highlights of the Budget Speech Summarized

  • Real GDP grew by 5.4% in the first half of 2018 compared to the annual target of 5.6%. Non-oil real GDP grew by 4.6% compared to the 2018 target of 5.8%
  • The fiscal deficit was 3.0% of rebased GDP at the end of September 2018 compared to a target of 2.7%
  • Total revenue and grants expected for the 2019 fiscal year is GHS58.9 billion, representing 17.1% of the rebased Gross Domestic Product (GDP)
  • The 2019 fiscal operation will have a budget deficit of GHS14.5 billion based on the total expenditure and total revenue and grants. To reduce the deficit, the government will have to borrow from both foreign and domestic sources
  • Inflation dropped to 9.8% in September 2018, down from 12.2% recorded in September 2017
  • Interest rates eased downward in line with the reduction in the Monetary Policy Rate
  • To help the government track its financial performance, the Ghana budget will integrate the Sustainable Development Goals (SDG’s) framework. This will be the first budget in Africa and second in the world, after Mexico to fully integrate the SDG’s framework

Revenue Policy Measures

  • Tax Identification Number (TIN) enforcement: The Revenue Administration Act, 2016 (Act 915) lists a number of transactions and services that cannot be accessed without a TIN. In 2019 sanctions will be applied against institutions and individuals who breach these provisions.
  • Government has completed a draft policy on exemptions which will be presented to Parliament in 2019 to be passed into law.

Important to note:

  • An additional Personal Income Tax band of 35% for monthly income in excess of GHS10,000 was introduced during the Mid-year Budget Statement and has meanwhile been assented by the President. This new tax band came into effect 01 August 2018.
  • Together with this change, the flat income tax rate for non-resident individuals has also been increased from 20% to 25%. This is applicable to Full Time, Part Time and Temporary non-resident employees.
  • The old and new graduated income tax bands effective from 1 August 2018 are as follows:

Resident Individuals

Annual Tax Rates effective 1 August 2018
Old Chargeable Income New Chargeable Income Rate of Tax (%)
First GHS 3,132 First GHS 3,132 Nil
Next GHS 840 Next GHS 840 5
Next GHS 1,200 Next GHS 1,200 10
Next GHS 33,720 Next GHS 33,720 17.5
Exceeding GHS 38,892 Next GHS 81,108 25
Exceeding GHS 120,000 35
Monthly Tax Rates effective 1 August 2018
Old Chargeable Income New Chargeable Income Rate of Tax (%)
First GHS 261 First GHS 261 Nil
Next GHS 70 Next GHS 70 5
Next GHS 100 Next GHS 100 10
Next GHS 2,810 Next GHS 2,810 17.5
Exceeding GHS 3,241 Next GHS 6,759 25
Exceeding GHS 10,000 35

 

  • However, following feedback from the public after the implementation of the new tax band, Government concluded that some relief from this tax measure is justified. Accordingly, Government proposes to review this band to impact monthly income above GHS20,000 at a rate of 30%. This should come into effect 01 January 2019.
  • The tax bands will be further adjusted to reflect the new minimum wage.
  • The new minimum daily wage is GHS10.65, 10% up from GHS9.68, effective 1 January 2019.

 

Contact our legislation team at info@crs.co.za if you require any additional information.

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