Tax Residency in Ghana
1. Criteria for Determining Tax Residency in Ghana
According to Section 10 of the Income Tax Act, 2015 (Act 896), an individual is considered a tax resident in Ghana if they meet any of the following conditions:
- Physical presence in Ghana for a period exceeding 183 days in a calendar year.
- Domicile in Ghana, as determined by the common law principles of domicile.
- Carrying out business in Ghana, either directly or through an agent.
- Employment in Ghana for a period exceeding 183 days in a calendar year.
For companies, tax residency is determined based on the place of incorporation or management and control. A company is considered a tax resident in Ghana if it is incorporated in Ghana or if its management and control is exercised in Ghana.
2. Impact of International Tax Treaties on Tax Residency Criteria
Ghana has entered into several double taxation agreements (DTAs) with other countries to prevent double taxation and promote cross-border trade and investment. These DTAs may modify or provide exceptions to the standard criteria for tax residency as defined in domestic law.
For example, under the Ghana-United Kingdom DTA, an individual is considered a resident of Ghana if they have a permanent home in Ghana and spend more than 183 days in Ghana in a tax year. However, if the individual also has a permanent home in the United Kingdom and spends more than 183 days in the United Kingdom in a tax year, they will be considered a resident of both countries. In such cases, the DTA provides tie-breaker rules to determine the individual's tax residency.
Conclusion
The criteria for determining tax residency in Ghana are designed to ensure that individuals and entities with significant ties to Ghana are subject to taxation on their worldwide income. International tax treaties may modify or provide exceptions to these criteria, reflecting the mutual agreement between Ghana and other countries to facilitate tax compliance and enhance economic cooperation.
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