Ghana Revenue Authority urged to conduct regular tax audits of NGOs

A group called the Inter-Class Associates of Chartered Tax Practitioners (CTP) has urged the Ghana Revenue Authority to conduct regular tax audit of Non-Governmental Organisation operating in the country.

Under Ghana’s tax laws, NGOs are registered as companies limited by guarantee and are therefore deemed as non-profit/ tax exempt organizations specifically with section 97(4) of the Income Tax Act, 2015 (Act

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A statement issued on behalf of CTP by Mike Kofi Afflu, a former president of the Chartered Institute of Taxation Ghana explained this was necessary due to the influx of many NGOs evading taxes while they operate as profit making ventures.

“The little research conducted by Inter-Class Associates, coupled with our practice experience in dealing with NGOs in Ghana, has revealed that more than 70% of NGOs registered in this country are involved in profit-making ventures and activities which are taxable, as provided for under section 97(5) of Act 896.”

“For example, there are NGOs involved in Trading activities, micro finance, illegal mining, transfer of funds, oil and gas, trading in foreign currencies, money laundering, etc. all these activities are taxable, as indicated above,” he stated.

“They evade the payment of taxes on the income of their employees – pay-as-you-earn (PAYE), that is for their staff salaries and allowances. They fail to withhold tax on payments they make for goods and services above the threshold of GH¢2,000.00 as provided by the Law. Rent payments are not subjected to withholding tax etc. all in breach of sections 114 to 120 of Act 896,” Afflu mentioned.

Though, the tax laws have made it clear and explicit on which kind of donations are exempted from taxes as provided for under section 100 of Act 896, CTP believes a full disclosure of funding received by NGOs from foreign sources and state organisations as part of the audit process is apt.