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PAYE, SSNIT and employment tax compliance in Ghana
Where a GRA review usually starts.
PAYE, SSNIT, Tier 3 relief, benefits in kind, bonus treatment and expatriate taxation. Payroll sits between finance and HR and frequently belongs to neither, which is exactly why officers look there first.
Request a payroll tax review All taxPayroll errors are systematic rather than occasional. Whatever is wrong is wrong every month, for every affected employee, until somebody looks. That is why a payroll review is where a GRA officer starts and why the assessments are larger than people expect.
The four we find most often
Benefits in kind not grossed up: vehicles, accommodation, fuel and allowances treated as cost rather than as employment income. Bonus taxed wholly at the graduated rates when the first 15% of annual basic qualifies for a 5% final rate, or the reverse. Tier 3 relief applied above the 16.5% cap. And expatriate employees taxed on the wrong basis entirely, which is the most expensive of the four.
SSNIT and the PAYE base
The employee's mandatory 5.5% contribution on basic salary is deducted in arriving at chargeable income, so PAYE is charged on the reduced figure. Voluntary Tier 3 contributions are also relievable up to 16.5% of basic. A surprising number of payroll systems in use in Ghana get this wrong and overstate the tax, which is an error in the employee's disfavour and still an error.
Why this is a tax service and not a payroll service
Running the payroll is a different engagement, and we do that too under Accounting and People. This service is about whether the treatment is correct and whether the exposure has been quantified. Many clients keep payroll in-house and use us only for the review.
PAYE and withholding tax, for the previous month
Employee SSNIT, deducted before PAYE is computed
Of annual basic, the bonus threshold taxed at a final 5%
Scope
What the review covers
Scoped to the periods still open, and to the categories where exposure actually accumulates.
Payroll tax review
Testing PAYE, SSNIT and Tier 3 across a sample of employees and months, reconciled to the general ledger and to what was actually filed and paid.
Benefits in kind
Identifying what has been provided, whether it has been treated as employment income, and quantifying the exposure where it has not.
Expatriate and non-resident taxation
Residence analysis, the basis of taxation, treaty considerations where they apply, and coordination with work permit and immigration positions.
Remediation and disclosure
Correcting the treatment going forward and, where historic exposure is material, quantifying it and advising on voluntary disclosure.
Process
How the review runs
Short, and it produces a number rather than a list of observations.
Records request
Payroll registers, the general ledger, filed returns and payment evidence for the periods under review.
Week 1Testing
Sample-based across employees and months, covering gross to net, statutory deductions and benefits.
Weeks 1 to 2Quantification
Exposure by category and by period, with the assumptions stated so it can be challenged.
Week 3Remediation plan
Corrections going forward, system and process changes, and a view on disclosure where historic amounts are material.
Week 3Follow-up
Retesting a later month to confirm the corrections took effect.
One quarter laterEngagement
Fees, timing and who does the work
Fee basis
Fixed feeSet on headcount and the number of periods reviewed. Remediation quoted separately once the position is known.Who does the work
Tax manager, partner reviewedWith a partner on any disclosure decision.Timeline
Two to three weeksFrom receipt of complete payroll records.Questions
Questions on employment taxes
Is SSNIT deducted before PAYE?
How is a bonus taxed?
What counts as a benefit in kind?
How are expatriate employees taxed?
Can you run our payroll as well?
Related
Read before you brief us
Next step
Send us three months of payroll registers.
We will tell you whether the treatment is right and quantify anything that is not, before somebody else does.
Also under Tax
Corporate tax compliance and returns
Annual returns, quarterly instalments, capital allowances and the reconciliation between accounting profit and taxable profit, handled as a routine rather than as an annual emergency.
GRA tax audit and objection support
Support through a tax audit, an assessment or a demand: the correspondence, the evidence, the objection within the statutory window, and the negotiation. Deadlines here are short and unforgiving, which is why the first call matters more than the last.
Transfer pricing under L.I. 2412
Documentation, benchmarking and the annual return under the Transfer Pricing Regulations 2020 (L.I. 2412), for businesses with related party transactions. And, before any of that, the harder question of whether the charge itself would survive a review.
VAT, NHIL and GETFund under Act 1151
VAT registration, monthly returns and the reconciliation between output tax, input tax and the ledger. Since Act 1151 took effect we have been reworking input tax positions, because the levies became claimable and most businesses are still treating them as a cost.
Exemption and incentive reviews
Tracing the basis of every benefit, exemption and concession you are applying, through the Exemptions Act 2022 (Act 1083), the applicable tax legislation and any approval that had to be given. Where the basis does not hold, we tell you before the Ghana Revenue Authority does.