Overview of Employer Tax Obligations in Ghana
Employers in Ghana are required to make various statutory contributions and deductions on behalf of their employees. The main regulatory framework is governed by the Labour Act, 2003 (Act 651), the National Pensions Act, 2008 (Act 766), and regulations from the Ghana Revenue Authority (GRA) and Social Security and National Insurance Trust (SSNIT).
The primary employer obligations include social security contributions, skills development levy, and payroll tax administration. All contributions are calculated on gross monthly salary and must be remitted within specified timeframes to avoid penalties.
Social Security and National Insurance Trust (SSNIT) Contributions
SSNIT Contribution Rates
Under the National Pensions Act, 2008 (Act 766) as amended by Act 883 of 2014, employers must contribute to the national pension scheme:
- Employer contribution: 13% of employee's basic salary
- Employee contribution: 5.5% of basic salary (deducted by employer)
- Total SSNIT contribution: 18.5% of basic salary
SSNIT Coverage and Eligibility
SSNIT registration is mandatory for:
- All employees aged 15 years and above
- Workers earning a minimum of GHS 50 per month
- Both Ghanaian and expatriate employees working in Ghana
- Casual workers employed for more than 6 months
Payment and Reporting Requirements
Employers must:
- Register with SSNIT within 30 days of commencing business
- Submit monthly contribution schedules by the 14th of the following month
- Pay contributions by the 14th of the following month
- File annual reconciliation returns
Second and Third Tier Pension Contributions
Second Tier (Mandatory Occupational Pension)
Under the three-tier pension system:
- Employer contribution: 5% of employee's basic salary
- Employee contribution: 5% of basic salary
- Managed by licensed trustees or fund managers
- Funds are portable when changing employers
Third Tier (Voluntary Provident Fund)
Optional additional contributions:
- Voluntary contributions by employer and/or employee
- Tax deductible up to 16.5% of basic salary
- Managed by licensed fund managers
Skills Development Fund Levy
The Education Act, 2008 (Act 778) and subsequent regulations establish the Skills Development Fund levy:
- Rate: 0.5% of total monthly payroll
- Payable by: All employers with 10 or more employees
- Payment deadline: By the 15th of the following month
- Purpose: Funding technical and vocational education programs
Payroll Tax Administration
Pay As You Earn (PAYE) Tax
While not an employer tax per se, employers are responsible for:
- Calculating and deducting PAYE from employee salaries
- Remitting PAYE to Ghana Revenue Authority by 15th of following month
- Filing monthly PAYE returns
- Issuing P9 forms (annual tax certificates) to employees
PAYE Tax Rates (2024)
Current individual income tax rates:
- First GHS 5,220 annually: 0%
- Next GHS 1,800: 5%
- Next GHS 3,000: 10%
- Next GHS 50,000: 17.5%
- Next GHS 300,000: 25%
- Excess over GHS 360,020: 30%
Workers' Compensation and Insurance
Workmen's Compensation
Under the Workmen's Compensation Act, 1987 (PNDCL 187):
- Employers must provide compensation for work-related injuries
- Insurance coverage is recommended but not mandatory
- Compensation rates are specified in the Act's schedules
- Coverage applies to all employees regardless of salary level
Other Insurance Requirements
- Group life insurance may be provided voluntarily
- Health insurance contributions through National Health Insurance Scheme (employer participation voluntary)
- Professional indemnity insurance for certain sectors
Expatriate Employee Considerations
Work Permit Fees and Taxes
For expatriate employees, employers typically bear:
- Work permit application fees (rates vary by category and duration)
- Residence permit fees
- Quota allocation fees where applicable
- Annual permit renewal fees
Tax Obligations for Expatriates
- Same PAYE obligations as Ghanaian employees
- SSNIT contributions required for all expatriate employees
- Potential double taxation agreement benefits (to be verified for specific countries)
Compliance and Penalties
SSNIT Penalties
Late payment or non-compliance attracts:
- Interest on overdue contributions at prevailing bank rates
- Administrative penalties for late filing
- Legal action for persistent default
- Potential business closure for serious violations
GRA Penalties
- Late payment penalty: 25% of tax due or GHS 250, whichever is higher
- Interest on overdue amounts
- Administrative penalties for non-filing of returns
Registration and Compliance Procedures
New Employer Registration
Essential registrations include:
- Ghana Revenue Authority: TIN registration and PAYE setup
- SSNIT: Employer registration within 30 days
- Department of Labour: Employment registration (to be verified)
- National Health Insurance: Optional employer registration
Ongoing Compliance Requirements
- Monthly SSNIT contribution schedules and payments
- Monthly PAYE returns and remittances
- Annual PAYE reconciliation
- Quarterly skills development levy payments
- Annual employment returns to Department of Labour (to be verified)
Note: Specific penalty rates and some procedural details should be verified with current regulations as these may change periodically. Employers are advised to consult with qualified tax professionals or directly with relevant agencies for the most current information.