How to reduce business taxes in Ghana 2022

In business, one thing is always certain; taxes. And to be honest, nobody smiles when paying more taxes.

In spite of the acclaimed benefits of taxes to the economy, businesses are always looking for ways to evade business taxes.

That’s illegal and this post doesn’t support that. Rather, knowing how to minimize the tax amount can help you save on these taxes.

The general corporate income tax (CIT) rate in Ghana is 25%, and here are some tips on how to reduce your tax amount paid to the Ghana Revenue Authority;

1. Keep records of expenses

A tip for reducing taxes is to keep proper records of all business expenses. Some expenses are tax deductible and having documents for them can help to reduce tax payable.

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Business expenses such as lunch for business partners, cost of business trips etc. should be recorded to help reduce your business tax burden.

2. Keep a fixed asset register

To reduce your business taxes, it is important to record cost of all the assets you acquired for your business. Ensure that you have kept an accurate and complete asset register for at least 12 months.

These assets, including the cost of transportation and installation, attract capital allowance. This allowance will help to reduce your tax liability.

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3. Pay and submit financial reports on time 

early submission help reduce tax burden
Pay taxes early or on time

The GRA allows businesses a grace period of three months to file their returns after the end of the calendar year. However, most businesses still delay or defer payment after their final assessment.

You wouldn’t want to do that, as late submission and payment attract penalties which could increase your tax liability. You can get in touch with the GRA if you need an extension of payment.

4. Make provisional payment

A huge income tax liability can be a burden on a business regardless of the size. When your business accounts are delaying, you can make a provision payment of your estimated taxable income.

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This way, you spread the tax over the year of assessment, without having to pay lump sum at the end of the year. It also help avoid or reduce penalties for delay of final payments.

5. Outsource some job functions

Outsourcing is a business practice where a service or business responsibility is contracted to a third party.

If your business has employees, you are required by law to withhold part of their salaries as PAYE tax. Indirectly, this is being paid by you and not your employees.

Instead of employing cleaners, security personnel or drivers, you can outsource these responsibilities to independent service providers. This way, you reduce the PAYE tax on your tax liability.

6. Explore tax credit options

Tax credit helps reduce tax burden
Look out for tax incentives for your business

The Ghana tax laws has made provision for tax incentives and special dispensation aimed at specific industries. This is to lighten their tax burden and encourage investment in those areas.

These credits or incentives are specific to capital investments, free zone developers/enterprises, contractors of residential premises, Covid-19 tax incentives, foreign tax credit and inward investment.

Business owners can explore these incentives to reduce their tax liability.

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