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HOW TO PAY YOUR TAXES

The Internal Revenue ACT, 2000 (ACT 592) charges any person who earns income from employment, business and investment to pay tax on a yearly basis.

EMPLOYEES
I
f you are an employee, then your salary is subject to tax under the 'PAY AS YOU EARN" (PAYE) system. 'PAYE' is the routine deduction of tax at source from your income whenever you are paid.

PAYE
The 'PAYE" system was introduced in Ghana from July 1, 1961. The rationale for its introduction is two fold :-

1. It is a means for government to ensure that all salaried workers who are eligible to pay tax do so, thereby revenue flows constantly into the national coffers, and
2. By deducting tax at source the tax burden is spread over the tax year and therefore becomes lighter and tolerable for the employee.

SELF-EMPLOYED PERSONS AND COMPANIES

In the case of a self-employed person or a company, income tax is paid at specified rates based on annual assessments made by the Commissioner, Internal Revenue.

Some Identified companies with good tax records have been given the options to self-assess

The tax payable for a Year of Assessment is payable in four equal installments by the end of the third, sixth, ninth and twelve month of your 'basis period'.

BASIS PERIOD
This is a period of twelve months or less which determines the income assessable to tax in a particular Year of Assessment.

Before the coming into force of the Internal Revenue Act 2000, (Act 592) individuals, partnerships and companies or body of persons could choose their own accounting dates. However, with the enactment of Act 592, all individuals and partnerships are required to adopt the government's accounting dates of 1st January to 31st December of the same year as their 'basis period'.

YEAR OF ASSESSMENT
The Year of Assessment is from 1st January to 31st December of the same year.

 
 
 
 

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