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2011 Government Budget Statement: Tax Amendments A LAWFIELDS BUSINESS LAW BULLETIN® SUPPLEMENT MARCH 2011 DOMESTIC TAXES-DIRECT TAXES All amendments, unless otherwise stated,take effect from 1st January, 2011 THRESHOLD OF 5% WITHHOLDING TAX ( ACT 814) The threshold of the 5% withholding tax on goods and services has been increased from GH ¢50.00 to GH ¢500.00. Contracts for the supply of goods and services exceeding GH ¢ 500.00 DOMESTIC TAXES-DIRECT TAXES ABOLITION OF GENERAL TAX HOLIDAYS FOR REAL ESTATE DEVELOPERS (Act 814) The general five year tax holiday granted to real estate developers is now abolished. It now limited to companies which partner the Minister responsible for Works and Housing for construction for sale or letting of low cost affordable residential premises and are certified as such by the Minister responsible for construction for sale or letting of low cost residential premises and are certified as such by the Minister responsible for Works and Housing. DOMESTIC TAXES-DIRECT TAXES GIFT TAX ( Act 814) The tax rate for gift tax has been increased from 5% to 15%. NATIONAL FISCAL STABILIZATION (Act 812) The National Fiscal Stabilization Levy has been extended till the end of 2011 DOMESTIC TAX-DIRECT TAXES PERSONAL RELIEFS (ACT 814) Personal tax reliefs have been amended as follows: 2006 rates (GH ¢) New rates (GH ¢) Marriage/Dependants 35 100 Old Age 35 100 Children Education (up 30 100 to 3) Aged Dependants (2) 25 50 Training Cost 100 200 DOMESTIC TAXES-DIRECT TAXES AIRPORT TAX (Act 813) (Effective 1st March 2011) Airport tax has been revised as follows: Domestic Travel GH ¢ 5 Regional Travel within West Africa $ 60 Economy Class Travel outside West Africa $100 Business Class Travel outside West Africa $150 First Class Travel Outside West Africa $200 DOMESTIC TAXES-INDIRECT TAXES . REVISED BUSINESS TURNOVER THRESHOLD FOR VAT/NHIL REGISTRATION (Act 810) All businesses with annual business turnover between GH¢90,000.00 are now obliged to operate VAT Flat Rate Scheme (VFRS) charging the tax at a flat rate of 3% Businesses, including service providers, wholesalers, manufacturers, etc. that fall within this turnover range and currently operate the invoice credit or standard VAT systems at 15% will be required to convert to the VFRS. All business whose annual turnover exceed GH ¢ 90,000.00 and currently operate the VFRS at 3% are now obliged to convert to the invoice credit or standard VAT system and charge and account for VAT at 15%. The GRA will notify all the affected businesses in writing and indicate the date of commencement. DOMESTIC TAXES-INDIRECT TAXES VAT/NHIL EXEMPTIONS ( Act 810) The following items which were zero rated have been re-classified as exempt items: Locally produced Pharmaceuticals Locally produced textbooks and exercise books Locally manufactured agricultural machinery and other agricultural implements and tools. Businesses which solely and principally deal in these items will therefore be deregistered from the VAT register. However, in the case of locally produced Pharmaceuticals, a list of essential ingredients/drugs will in due course be published in consultation with key stakeholders. DOMESTIC TAXES-INDIRECT TAXES VAT ON HAULAGE AND VEHICLE HIRING(Act 810) The scope of transportation as an exempt item under the VAT law has been narrowed to exclude haulage and vehicle hiring. Haulage and Vehicle hiring are therefore now taxable under the VAT law. COMMUNICATIONS SERVICE TAX (CST) (Act 754) In accordance with the Communications Service Tax (CST) Act 2008, Act 754, the coverage of CST has been extended to include cover the following: Public/Corporate Data Operators Providers of Radio (FM) broadcasting services Providers of Free-to0air television services. DOMESTIC TAXES-INDIRECT TAXES CUSTOMS DUTIES Tariff No. Product Description Levy GH¢ Premium Not exceeding 8 pesewas Litre Kerosene Nil Gas oil Not exceeding 8 pesewas/litre Marine Gas Oil(MGO) Not exceeding 3 pesewas per litre Residue Fuel Oil (RFO) Not exceeding 4 pesewas per litre Liquefied Petroleum Gas Not exceeding 5 pesewas per (LPG) litre. Premix Nil DOMESTIC TAXES-INDIRECT TAXES IMPOSITION ENVIRONMENT EXCISE TAX – (Act 809) (NB: Registered Manufacturers whose packaging materials for water and minerals water fall within the below list of plastic packaging products must apply to the Commissioner General for exemption from the Environmental Tax) Manufacturers are to enter and clear such products to a Customs Declaration establishing the claim to this exemption, under and appropriate Customs Procedure Code (CPC). An Environmental Excise Tax of 20% has been imposed on polythene bags and other plastic Packaging materials covered under Chapters 39 and 63 of the Harmonized System and Customs Tariff schedules 2007 version. However, this tax will not apply to the plastic packaging materials of water and mineral. The scope of items covered by this provision is listed in the schedule below: Heading Hs Code Commodity Rate of Duty Description 39.19 Self adhesive sheets, films… 39.20 Other plates, sheets films… 39.23 Articles for the conveyance or packing of DOMESTIC TAXES-INDIRECT TAXES NEW AD-VALOREM EXCISE DUTY RATE- (Act 809) (For the avoidance of doubt, the import excise duty on excisable goods shall be imposed on Cost, Insurance and Freight (CIF) basis at the point of importation. The Ad-Valorem Excise Duty rates on all excisable goods except on Spirits and Cigarettes have been reduced by 2.5%. The effect of this is shown per table below: Tariff No. Commodity Description Rate Duty 1. Tobacco product: Cigarette 150% of the factory price Cigar 150% of the factory price Negrohead The kilogram GH ¢12.00 Snuff and Other tobacco 170.65% ex factory price 2. Beer other than indigenous beer: In bottles In kegs 47.5% of ex-factory price Stout 47.5% of ex-factory price 47.5% of ex-factory price 3. Wines including sparkling wine 22.5% of ex-factory price 4. Waters, including mineral waters of all description 17.5% of ex-factory price Distilled, bottled and other packaged water 17.5% of ex-factory price Malt drinks such as Malta 17.5% of ex-factory price DOMESTIC TAXES-INDIRECT TAXES ZERO RATED IMPORTED DUTY IN LIGHT EMITTING DIODE LAMPS (LED) FOR DOMESTIC AND PUBLIC LIGHTING-(Act 809) (NB: For the avoidance of doubt, the zero rate duty applies to LED lamps for domestic and public lighting only. Other LED lamps for use on motor vehicles, portable lamps, and the use on electronic equipment will attract the appropriate duty and taxes under sub heading “ other” LED lamps as shown in the table. A new national sub division has been created in the 2007 harmonized system and Customs Tariff Schedules to admit Light Emitting Diode Lamps (LED) for domestic and public lighting at zero rate import duty in conformity with the policy on Energy Saving Lamps. Refer to table below: Heading H.S. Code Commodity Import Duty Import VAT Description 854.70 Other machines and apparatus Light Emitting Diode (LED) For Domestic 0% 0% and Public lighting DOMESTIC TAXES-INDIRECT TAXES The Ghana Investment Pormotion Centre (Promotion of Tourism Instrument 2005 L.I. 1817 REVOKED (Act 810) The Ghana Investment Promotion Centre (Promotion of Tourism) Instrument 2005 (L.I. 1817) is revoked. This therefore means that Part C of Chapter 98 of the Harmonized System and Customs Tariff Schedule 2007 Version, which administers concessionary duty rate for the inputs of the Tourism Industry approved by the Ghana Investment Promotion Council, shall no longer apply. DOMESTIC TAXES-INDIRECT TAXES IMPOSITION OF LEVIES ON POULTRY PRODUCTS AND TEXTILES AND TEXTILE ARTICLES The import duties, taxes and additional 5% Levy on Poultry products and specified textiles and textile articles still applies. IMPORT DUTIES ON FOOD ITEMS AND CRUDE VEGETABLE OILS The import duty rates imposed oin some specified commodities under the 2010 budget still applies. REDUCED IMPORT DUTY ON ASBESTOS The 5% concessionary import duty rate on Asbestos remains unchanged. A clearance Permit from the EPA for all commodities falling under Chapter 25 is required. PERIOD FOR WAREHOUSING OF GOODS REVIEWED The period allowed for the warehousing and re-warehousing of items have been reviewed according to the following categories: Perishable 3 months General Goods 12 months Raw Materials Up to 2 yrs There will be no option for the re-warehousing of general goods. Perishable goods may be allowed to be re-warehoused for a limited period of one(1) month upon application and approval by the Commissioner. Lawfields Consulting Important Notice This publication has been sent to existing clients and contacts. We have sent you this supplement for the purpose of our legitimate interest in keeping our clients and contacts informed about relevant changes in Government policy for 2007. Information contained in this supplement is intended as a brief guide and not as definitive professional advice For in-depth analysis of any piece of information contained herein, contact us at email@example.com. Kindly notify us at firstname.lastname@example.org if you do not wish to receive any of our future publications. This document has been issued by Lawfields Consulting. Information in this newsletter have been extracted from publicly available information. While reasonable care has been taken to ensure that the facts given are correct, no representation or warranty is made as to their accuracy and completeness and no responsibility of any kind can be accepted by the organization.
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