Tips to Reduce your Business Tax in Ghana

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I never thought I’d hear anyone say s/he would like to pay more taxes until Warren Buffett did. So if you’re excited about paying more tax, please stop reading now. For the rest of us who are not too keen on handing over 25% or more of our profit to the Ghana Revenue Authority (GRA), the following legal tips would be useful.

1. Keep proper records of all expenses. Most small business owners often blur the lines between personal expenses and business expenses. In order to take full advantage of tax deductible expenses, you have to keep records of them with as much documentation as possible. Trips for business purposes, lunch, phone talktime et cetera, must all be captured to reduce your tax burden.

2. Keep a fixed assets register. Be sure to keep records of the costs of all the assets you acquire for the busineess. Include the costs of transportation and installation. You would be granted capital allowance for these assets, which would help reduce your tax liability.

3. Outsource some services. Having employees means you have to withhold part of their salaries and pay it as PAYE. Since businesses usually agree to pay a salary based on the net figure, the tax bill is actually coming to the business owner. Outsourcing means assigning a part of a business responsibility to a body independent of the business. Instead of hiring a cleaner, why not outsource to a cleaning service? This saves you the payment of PAYE.

4. Make payments and submit financial statements on time. It is always a struggle for a business to close it’s annual books on time. GRA expects your accounts three months after the end of the calendar year. It may also be tempting to put off payment for some time after your final assessment. Delays attract penalties; you don’t want that. Keep in touch with the GRA through letters if you need extensions. This may save you some cedis in penalties.

5. Make provisional payments. I know the idea is to keep you from paying more tax but provisional payments are helpful, especially when your accounts are delaying. Making provisional payments gives the GRA an indication that you’re not seeking to avoid tax. It also increases the chances that you when a decision comes down to the discretion of the tax officer, s/he will decide in your favour.

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Jerome Kuseh

Financial Analyst | Accountant | Private Investor
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